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Economic News

How mortgages will stop with a government shutdown – no bucks, no Buck Rogers!

Now that our friends at the Federal Reserve have changed the mortgage pay system for borrowers and broker, there is more “good’ news from Washington.

If a budget stalemate occurs and the money dries up because of the lack of a budge deal, the mortgage business comes to a halt.

Why you may ask? Well, below are just a few reasons.

Top reasons a gov’t shutdown stops mortgages:

Tax transcript: If the IRS is on furlough, we will not be able to obtain tax transcripts. If you have a registered/locked loan with us and have not already delivered it to the branch, please upload your completed and signed 4506T into eMagic TRIO now. Even though the TRIO folder will not contain a complete file, please upload your registration or lock confirmation and select “deliver to Underwriting.” You will need to check the audit trail in TRIO to confirm receipt by SunTrust Mortgage. We will order the transcripts prior to the shutdown to minimize a potential delay when you deliver your loan file.

Flood insurance: Borrowers may have difficulty obtaining flood insurance through FEMA during this period.

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FHA: We understand that HUD may not support FHA Connection during their hiatus, and therefore we will not be able to order case numbers or perform other functions in FHA Connection while they are on furlough.

Rural Housing: We are not sure of the impact to GUS since that system was created since the last shutdown in 1995. However, we should anticipate the system will not be available. In addition we will not be able to get conditional commitments during the shutdown.

VA: We should anticipate that the system by which VA appraisals are ordered will not be available.

Other than that, Fannie and Freddie are sort of governmental agencies and they may not be able to communicate with the needed oversight people. Therefore, no one can make decisions.

I think we should all take a vacation! Oh wait, the air traffic controllers will not be there. I guess it’s back to the bunkers!

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Written By

Realty Reality! That describes Fred, a sharp witted and outspoken realist for the mortgage and real estate world who has appeared on CNBC and NPR's Marketplace along with being quoted in the New York Times, The Wall Street Journal and other media outlets. Fred is the CEO of U S Spaces, Inc/Arrivva (a real estate brokerage firm in PA, NJ, DE and CA) and U S Loans Mortgage Inc (mortgage brokerage in PA, CA, FL and VA), and serves on the Board of Directors and is the Federal Legislative Director for the UpFront Mortgage Brokers. Fred is also the co-creator of real estate startup Rentscoper.com, a mathematically driven rental search engine. See everything Fred at fredglick.com.

26 Comments

26 Comments

  1. Melanie Wyne

    April 7, 2011 at 2:41 pm

    My NAR Government Affairs colleagues prepared a memo discussing how real estate could be affected by a government shutdown. You can access it here: https://www.realtor.org/government_affairs/gapublic/potential_shutdown

  2. MH for Movoto

    April 7, 2011 at 3:03 pm

    Yiiiiikes. Am I the only one who really can’t BELIEVE they’re doing this around tax time? Seriously?

  3. Fred Glick

    April 7, 2011 at 3:38 pm

    Thanks, Melanie!

  4. Fred Glick

    April 9, 2011 at 1:21 pm

    Good news! Buck Rogers will be appearing!

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