More Information on How the Government Shutdown may Affect You

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Filed under: Market Comentary

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On the heels of last week’s government shutdown, James R. Hood, Consumer Affairs founder and editor asks the question, “Does it really matter if the feds stay home?”

The first week , the shutdown of the federal government, according to Hood, wasn’t much of a story outside of Washington. However, he said the answer to his posed question should soon become clear, as the shutdown will begin to be felt in the real estate world.

Hood explained that with the IRS and other agencies closed, income verification and other “vital” data can’t be obtained, which will mean mortgage applications can’t be processed.

Hood stated that real estate and new-car sales, both hugely dependent on the ability to confirm buyers’ income, have been the “mainstays” of the struggling economy. And, if they happen to slow down, many things, including real estate, could get “rocky.”

In Arizona, for example, says Hood, where the real estate market has just begun to recover, the transactions are reportedly at a standstill due to this vital information remaining unavailable.

According to an Arizona Family report, Duke Pyle of Academy Mortgage Corporation, said, “It’s the tax transcripts and Social Security number verifications which aren’t available.

The Consumer Affairs article quoted realtor Lisa Bartlett as saying, “If I can’t close home loans with my buyers than I don’t get paid, so everybody in the housing industry income is going to be affected.”

Hood explained that this is terrible news not only for home buyers and sellers, but also for realtors.

And, according to Hood, there is also the problem with federal underwriting. The Federal Housing Administration insures homes for low and middle income first-time buyers. It has a “skeleton staff” of 68 employees working during the shutdown, which definitely isn’t enough to handle the thousands of applications submitted daily.

Hood said that a lot of concern focuses on where the buyers are in the timeline. He said that it normally takes several weeks to close a transaction, so, for the home buyers who are in the early or middle portion of the home buying process, the disruption may be minor if the shutdown can be resolved within the next week or two.

One final issue Hood mentioned was the looming debt ceiling. A failure to raise the debt ceiling could possibly cause the U.S. to default for the first time in history.

If you are currently thinking about buying or selling your home and you are concerned about how you may be affected by the government shutdown, please give me a call and I can walk you through the steps.

 

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