Real Estate Report

(Jan. 18, 2019) The National Association of Realtors reported recently on the various segments of the real estate industry that are affected by the partial federal government shutdown that started at midnight on Dec. 21.

Included in the partial shutdown are some federal housing, mortgage and other programs of interest to the real estate industry. NAR’s summary of the impact on selected agencies is provided below.

Environmental Protection Agency: Under EPA’s shutdown plan, most employees are now furloughed. This will affect various regulatory programs and compliance activities, such as wetlands determinations under the 404 program and enforcement of the lead-based paint disclosure and renovation, repair and painting programs.

Federal Housing Administration: HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program except for HECM loans. It will not make new commitments in the Multi-family Program during the shutdown.

FHA will maintain operational activities including paying claims and collecting premiums. FHA Contractors managing the REO/HUD Homes portfolio can continue to operate. Some delays with FHA processing may occur due to short staffing.

Government Sponsored Enterprises (GSEs): On Dec. 26 both GSEs, Fannie Mae and Freddie Mac, updated or clarified their loan purchase requirements in case of a shutdown.

Freddie Mac requires all borrowers to sign a 4506T request form prior to close, but the request does not have to be processed prior to close. Fannie Mae requires the same unless the borrower’s income can be verified though Fannie Mae’s proprietary Desktop Underwriter verification system in which case no 4506T is required.

Internal Revenue Service: The IRS will close and suspend the processing of all forms, including requests for tax return transcripts (Form 4506T). While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA.

Delays can be expected if the shutdown continues. Some loan originators may adopt revised policies during the shutdown, such as allowing for processing

National Flood Insurance Program (NFIP): After NFIP operations were initially suspended over questions raised by government attorneys, NAR worked with the White House and Congress to clarify that the government shutdown does not affect the sale or renewal of flood insurance policies or the payment of claims on existing policies.

Rural Housing Programs (USDA Loans): The U.S. Department of Agriculture will not issue new rural housing Direct Loans or Guaranteed Loans. Scheduled closings of Direct Loans will not occur. Scheduled closings of Guaranteed Loans without the guarantee previously issued will be closed at the lender’s own risk.

– Lauren Bunting is a licensed Associate Broker with Bunting Realty, Inc. in Berlin.

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