How the Government Shutdown is Affecting the Real Estate Industry

The partial federal government shutdown that began on December 22, 2018 has been going on for several weeks and is beginning to take a toll on the real estate industry. While decisions are being made on Capitol Hill, buyers and sellers in our area that are planning to move are dealing with the long-reaching effects of the shutdown.

According to the National Association of REALTORS® (NAR), 25% of buyers are having second thoughts about pursuing their home purchase right now due to “the general economic uncertainty”, as published in their recent survey on the federal government shutdown.

Lawrence Yun, the NAR Chief Economist, states that “a home purchase is a major expenditure that simultaneously involves a high level of excitement and anxiety, and the current government shutdown adds another layer of unnecessary complication to the home buying process. The shutdown is causing tangible harm to potential buyers, the real estate market and economic growth.”

While this may seem daunting to prospective homebuyers, it is important to remember that this is temporary. The Ben Chenault team at MortgageBanc offered some great advice on what to expect during this time if you’re in the process of buying or selling your home.

TAX DOCUMENTS | Mortgage experts tell us that all loans (FHA, VA, conventional and Alabama housing finance authority) that would have required verification from IRS of tax returns (4506T Request for Tax Transcripts) are accepting the signed tax return itself. As the IRS is trying to process these, waiting for the receipt could delay a closing.

FLOOD INSURANCE | If you’re needing to take out a flood insurance policy, FEMA is open for those in need if a loan requires it.

USDA RURAL | Unfortunately, one of the harshest areas affected in our industry is the USDA rural housing loan program. Ben Chenault warns us that loan approvals will not be issued at this time, so if you were planning on purchasing a property with this loan type, your closing will be delayed until the shutdown is resolved.

VA LOANS | The VA has kept its loan program afloat during the government shutdown, but some loans may experience delays.

SOCIAL SECURITY | Borrowers may not be able to obtain income benefit documentation information in a timely manner during the shutdown. But in most cases, the borrower has the documentation needed without assistance from the social security office and/or can obtain the information online. Social security, retirement and disability checks and deposits will be paid.

If you have more questions about how the federal government shutdown affects real estate purchases reach out to an ARC Realty agent.

Have questions about mortgage loans? Contact the Ben Chenault team.