Below is a summary of some of the government services impacted by the government shutdown, and how the shutdown will effect Real Estate deals you may have in progress.
FHA Case Numbers: – FHA Connection is operational through the government shutdown.
Flood Insurance: – Flood insurance through FEMA will not be obtainable. Any closings on properties in a known flood zone that don’t already have Flood Insurance in place will be delayed until the shutdown is over. All lenders require a FEMA flood cert for their loans.
IRS 4506T Processing: – A 4506 is a transcript from the IRS lenders use to verify that the tax returns submitted by a borrower for loan approval are exactly what the borrower submitted to with the IRS. The IRS will not process them until the shutdown is over. All lender’s investors including Freddie Mac and Fannie Mae require IRS transcripts for the transfer of loans. In the meantime, Wintrust Mortgage has revised our policy to accommodate deals to make sure this issue will not be a hang up for you or your clients.
For Conventional, VA and FHA loans, we will accept the following in lieu of transcripts:
- Tax returns provided by the borrower.
- A letter (email is fine) from the borrower stating the tax returns provided to us are exact copies of what was filed with the IRS.
- A copy of the cancelled check paid to the IRS for corresponding years of returns provided, (or proof of receipt of a tax refund).
USDA Underwriting Approvals: – Due to the government shutdown, the GUS system is inactive and USDA personnel are not able to facilitate the issuance of a Conditional Commitment. A USDA loan is unable to proceed to closing until the USDA offices are reinstated.
Appraisal systems: All appraisal systems will remain functional throughout the shutdown.
Social Security Administration: – The SSA has indicated their staff will be reduced significantly and the service they offer to verify identity/social security numbers via the
SSA-89 form will be limited, or non-existent. Most lenders don’t use the SSA on all loans – only loans where Fraudguard calls for us to verify a social security number discrepancy. In cases where Fraudguard calls for a SS number verification, and we can’t get one due to the system being down, our underwriters will make the determination on a case by case basis whether or not we will close without one, and obtain the form after closing.
Again, this is a fluid and evolving situation. We’ll continue to send updates as new info become available. Any questions regarding any of the above or on files in progress, please feel free to call our offices directly at 1.866.535.1942.