As the possibility of a federal government shutdown looms, prospective homebuyers may face challenges, especially when navigating the home loan process.

Here’s a breakdown by Brickfront Properties and Construction of what to expect and how it could affect your homebuying plans.

What Stays Operational During a Shutdown?

Fannie Mae and Freddie Mac will actively continue processing mortgage loan applications despite a government shutdown.

However, federal employees who are buying a home may encounter issues with income verification, as certain government services, like IRS and Social Security verifications, could experience delays.

In previous shutdowns, Fannie Mae has provided guidance on how its verification and approval processes would operate. Some steps, such as acquiring IRS transcript verification reports or social security verification, may be delayed until the government is funded again. Additionally:

• Loans typically cannot be purchased by Fannie Mae if they close and deliver before verbal verification of employment.
• Mortgagees who aren’t being paid during the shutdown may be able to request loan forbearance.

Impact on FHA Loans and HUD Approvals

For buyers relying on Federal Housing Administration (FHA) loans, the process may slow down. The FHA is likely to experience backlogs due to limited staffing, potentially delaying the approval of new mortgage loan applications.

The Department of Housing and Urban Development (HUD) will also continue to approve loans for single-family homes, albeit at a slower pace. However, HUD cannot approve financing for pending multifamily housing projects during a shutdown.

What Homebuyers Should Know

Homebuyers should prepare for potential delays in the mortgage process, especially if they are federal employees or relying on FHA loans. Staying informed and proactive during this time can help minimize disruptions to your homebuying plans. It’s crucial to maintain communication with your lender and understand how the shutdown may impact specific aspects of your loan approval.

While a government shutdown may bring temporary uncertainty, homebuyers can still navigate the process with the right information and planning. Brickfront Properties and Construction encourages buyers to stay updated on developments and continue moving toward their goals with confidence.