The Government shutdown is affecting most mortgages, according to an email I received from a lender.

Though FHA announced they would continue processing applications during the shutdown, there are many other loan types, and it turns out, all of them may be affected in some way.

Why would your conventional mortgage be affected?

1) The IRS has suspended processing of Form 4506T. The 4506T form is a request for a tax return transcript.  A loan is not able to close without verification of either W2 or tax returns.  Now, if your lender has already done this step, then the loan won’t be delayed by this. New files, though, or those early in the process, will be delayed until the shutdown is over, and the IRS resumes processing these forms.

2) If you are a Government Employee — Unfortunately, due to furloughs, employment verifications may be delayed or not possible to obtain while the government is shut down. It is also possible that government employees who are furloughed may not be able to close on a mortgage until the government back in service. Lenders are required to do a final employment verification within 24 hours of closing, and if your employment cannot be verified, your loan cannot close.

Other mortgages affected:

1) USDA Loans without a commitment in hand will not be able to close during the shutdown.

2) Though FHA and VA will continue to process loan applications, any change requests may not be able to be made.

Right now we just have to hope that the government can get their act together quickly and come to a resolution to end this shutdown as soon as possible.

Thank you to Jim Conway of Primary Residential Mortgage for the above information.

Photo courtesy of nikcname via Flickr CC