The Ripple Effect of the Government Shutdown Started to Affect Home Loans

The Government Shutdown could affect buyers who need loans to purchase their home. The IRS is currently closed so lenders are unable to obtain tax transcripts which are required to process most loans. The Social Security administration is closed as well and lenders are unable to verify social security numbers. FHA is not endorsing new loans in the multi-family mortgage program. Not to mention, the federal workers may not qualify for home loans as their income has been impacted due to the shut down.

Most buyers are being affected in some way, whether it’s a short or long delay. While it is unlikely, this could create a possible backlog of loans being sold to an investor like Fannie Mae and Freddie Mac so the lenders can fund additional loans. If Fannie and Freddie stop purchasing loans on the secondary mortgage market, until they can get the tax transcripts for example, the lenders could potentially run out of money to fund more home loans. It just depends on how long the shutdown lasts.

A small percentage of home sales are cash sales. If you are selling your home, you might want to prepare for a possible delay.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to Real Estate advice from the expert himself, Rick Sadle.

Copyright © 2013 Portland's Real Estate Advisory.