US Government Shutdown and Its Impact on Mortgage Lending As many of you are already aware Congress was not able to come to a resolution by the midnight eastern time deadline to avoid a partial shutdown of the federal government - this comes with some impacts to all lending institutions, including Fairway. Some government agencies have not yet issued specific guidance, we are speculating on some of the likely outcomes based on industry sources and past experiences in 2012 and 2011 where shutdowns were threatened. Agencies that have been deemed essential with no likely impact on lending: • Federal Reserve Banks - expect zero impact on our ability to send and receive wires through Fedwire. • FNMA & FHLMC - MBS trading, security issuances, guaranty, loan purchasing and loan servicing functions should all remain intact. Desktop Underwriter, EarlyCheck, and Uniform Collateral Data Portal should all remain functional. • GNMA - expect no impact to security issuances or MBS trading functionality. • VA - announced in circular 26-13-20 that the VA Home Loan Program would function as normal in the event of shutdown. • FHA - lenders will still be able to order case numbers, access CAIVRS and TOTAL scorecard. Homeownership Center Staff and "Call FHA" staff will be reduced slightly so manual case transfers and case cancellations will not be processed in most cases. Lenders should still remit MIP on closed loans, and cases will continue to be endorsed per a post from HUD from 9/27. Agencies where there can be minor impacts on production: • 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. • IRS - We will not have the ability to verify Tax Transcripts, however, we have made a Corporate decision to proceed without verifications on loans we are able to underwrite internally. Agencies where there can be significant impacts on production: • USDA -Effective immediately, USDA Rural Development office personnel is on furlough until further notice. GUS underwriting engine has been placed in inactive status. Pending mortgage loan transactions, where a USDA Conditional Commitment (RD 1980-18) has not been issued by the agency, will be unable to proceed to closing until the USDA office are operational and able to issue Conditional Commitments. How will this impact a USDA loan transaction? Fairway Independent Mortgage Corporation has delegated underwriting authority for USDA?s Guaranteed Rural Housing loan program. A USDA loan transaction is underwritten by our in house underwriting staff for qualification purposes. Use of GUS, USDA?s automated underwriting engine is a part of the underwriting process. FIMC?s underwriting staff will continue to review USDA mortgage loan transactions and will render a conditional decision based on being able to update the GUS underwriting engine and receipt of USDA Conditional Commitment RD 1980-18. 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 which will only happen upon Congressional resolve. Please note that all lenders are affected equally in this situation. A contract may need to have financing and closing contingencies extended. Extensions will need to allow for extended delays while the USDA offices work through any backlogs. Alternatively, borrowers may qualify for another mortgage loan program. All told while the shutdown adds unnecessary uncertainty to the lending process for our co-workers and customers the impact actually felt could be minimal for most customers and referral partners. As with any change my goal is to seek counsel, stay informed and communicate honestly. I will communicate any new information via email. This is a very fluid situation, and we will post other updates as needed. Fairway continues to close and fund loans.
Posted on: Thu, 03 Oct 2013 01:18:44 +0000
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