Congress has failed to approve a budget for the fiscal year providing funding for most government operations. The federal government has shut down or significantly reduced staff for many of its programs due to the failure. So how will that affect our real estate market?
IRS is closed: Most lenders require transcripts of borrowers recent tax returns from IRS to verify income, so the shutdown could delay some FHA backed loan approvals. Some lenders have adopted relaxed policies during the shutdown which allow for transcripts to be received from IRS at a later date.
FHA (Federal Housing Administration) is operating with minimum staffing: FHA will still underwrite and approve loans but the staff that is actually still working has been drastically reduced so that may also cause some delays.
Fannie Mae and Freddie Mac are not government entities but some of the processes to approve loans require verification from government entities (i.e. Social Security Administration) so you could possibly experience some delays in their approval process.
For the most part, the government shut down may slow the approval process and delay some closings but real estate transactions will still go on.
***Sources: Realtor.com "Government Shut Down Updates" , "The Government Shutdown And Its Effect On The Real Estate Market" article by Bradley Arant Boult Cummings LLP.
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