The Government Shutdown and the Charlotte Real Estate Process

As you all know by know, Congress did not approve a Continuing Resolution (CR) which provides funding for most government operations. Many programs and offices of the federal government will be shut down until legislation for funding is signed. What does that mean to you if you are in the process of a Charlotte real estate transaction or soon to be in one?

The Internal Revenue Service (IRS) is closed and the processing of all forms is suspended. Form 4506T is a tax transcript that is required for most loans. Currently, no tax transcripts can be ordered. The Social Security Administration is also closed. As a result, verifying Social Security numbers through the Consent Based SSN Verification Service is suspended and can slow down mortgage processing.

The Federal Housing Administration states that FHA will endorse new loans in their Single Family Mortgage Loan Program, but not in their Multi-Family Program during the shut down. Expect be delays in FHA processing. Likewise, VA Loans will continue to be processed but delays will be incurred. Because the National Flood Insurance Program is not funded by tax dollars, it will not be impacted. And for USDA loans, essential personnel are impacted by the shut down. As a result, lenders will not receive approvals during the shut down but if they received a conditional commitment from the Rural Development office before the shut down, then they may close those loans. If a conditional commitment was not issued prior to the shut down, the lender must wait before closing a loan. Government sponsored entities like Fannie Mae and Freddie Mac will continue to operate normally.

Every mortgage loan is going to be impacted by the closure of the IRS and the inability to order and receive tax transcripts. At this time, there is no contingency plan. It is important that you talk to your mortgage lender if you have a real estate transaction in progress or are going to write an offer. If it is a NC contract, enough time needs to be allowed in the Due Diligence period to obtain this information. Keep in mind, there is the potential of a backlog and time delay once the offices are reopened.

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