Partial government shutdown has stretched all the way into the new year. Here is an article to help understand the effects on the USDA financing home buying process
Closing Homebuyers with USDA loans
Government shutdown has affected home buyers who were scheduled to close on their homes in the past 2 weeks. The U.S Department of Agriculture needs to finalize mortgages that are guaranteed by the agency. With the USDA being closed for almost 2 weeks families are awaiting those approvals.
This affects borrowers who depend on the USDA loans to purchase a home. This loan program offers no down payment and low interest rates for rural and suburban home buyers.
“We just can’t close a USDA loan without a commitment letter from them. “Your loan is at a standstill,” says Pava Leyrer, the chief operating office of Northern Mortgage Services in Grandville, Michigan. Leyrer’s company is an approved USDA lender.
Leyrer is telling her affected clients to call their representatives. Otherwise, they may ultimately need to switch into a different loan. “How long will the seller wait, especially if the sales contract expires?” she says.
The other mortgages backed by the government are unaffected so far by the shutdown. Fannie Mae, Freddie Mac and the Veterans Administration – which all back home loans – are running as normal.
The Federal Housing Administration, which guarantees mortgages popular among first-time home buyers, is operating with a smaller staff because of the shutdown but is still approving loans.
Lenders are also working around other shutdown-induced hiccups.
For instance, they can’t verify a person’s tax information with the Internal Revenue Service, which has limited services. As a result, many lenders are still approving those loans conditionally and will confirm the information later when the IRS reopens, says John Stearns, a loan originator with American Fidelity Mortgage Services in Mequon, Wisconsin.
In other cases, those who already have a USDA mortgage are running into trouble. Jenneffer Azcuy, a homeowner in Lynn Haven, Florida, with a USDA mortgage, is waiting to get the insurance money she needs to repair her house after it was damaged by Hurricane Michael in October.
“Since my insurance repair check is over $7,500, the USDA controls the disbursement of funds,” Azcuy says. “But the money is tied up.”
Azcuy has a contractor lined up to repair her leaky roof, replace a fence, and fix the gutters and outside doors. She has called the USDA for help but can’t leave messages because the voicemail is full.
“It’s ridiculous. This town is devastated as it is from the hurricane,” she says.
Jenneffer Azcuy (left) surveys the damage to her home after Hurricane Michael with her sister, Sasha Azcuy, and friend, James Clive. (Photo: https://andyswann.co.uk)
On Capitol Hill
Azcuy and the Smiths hope the new House of Representatives convening on Thursday can end the shutdown. Democratic House leaders have scheduled votes on a package of bills to reopen the federal government and provide more time for Congress to negotiate a border funding deal with the White House.
Until then, we all wait.
Article obtained from : https://www.usatoday.com/story/money/2019/01/03/government-shutdown-2019-some-homebuyers-cant-finalize-mortgages/2472112002/