Shutdown will stall home loans for thousands

Julie C. Nichols General

Washington Post – Lisa Rein

Beginning next week, thousands of home buyers will be unable to get approvals for their mortgages because of the government shutdown, potentially undercutting the nation’s resurgent housing market. Without paperwork from the Internal Revenue Service, the Social Security Administration and in many cases the Federal Housing Administration, banks and other mortgage lenders will be less willing to make loans, if they can make them at all. For instance, lenders rely on the IRS to confirm borrowers’ income and on Social Security to confirm their identity.

Every day that government offices remain shuttered will delay an ever-larger fraction of mortgage closings, industry leaders say, jeopardizing mortgage and interest-rate approvals and spooking sellers. About 15,000 new home mortgages and 18,000 refinancings on average are completed across the country each day. On Friday, House Republicans continued to insist on changes to President Obama’s health-care program as a condition for funding the government.

But with attention on Capitol Hill shifting to an Oct. 17 debt-ceiling deadline, there was no end in sight to the government shutdown, nor relief for prospective home buyers. “Most people don’t really think about, ‘Well my loan is going to be underwritten by a federal agency,’ ” said Marj Rosner, vice president and sales manager at Long & Foster, a real estate firm. “But the government has a huge imprint here.”

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AS A SIDE NOTE, Guardian Mortgage underwrites our loans in-house, so for the moment we are still business as usual.