While the government shutdown is definitely not a good thing for most Americans, it does not have to negatively impact the real estate market, or this America (Foy).
News channels and media outlets are capitalizing on fears and reporting on the possible negative consequences to the real estate market. It’s easy to spread panic through the media, but such speculations are not always credible. Our country, like many, has had financial crises in the past. However, our citizens will continue to go to work, live their lives, and purchase homes. It doesn’t matter whether you are in the market to buy a home or sell your home there is no reason to think that either process will be affected by the government shutdown, unless you are seeking a Federal Housing Administration (FHA) backed loan. (While the FHA continues to operate and provide insurance for loans, they are doing so with a huge reduction of staff due to the shutdown. This reduction will cause the process to take much longer.)
Prior to Monday, October 7, 2013, there was a fear that delays in approving mortgages would result from the inability of lenders to verify critical information with government institutions. For example, lenders need to confirm Social Security numbers with the SSA and income with the IRS, but because the government employees are not getting paid there is nobody there to verify this information.
After Freddie Mac and Fannie Mae announced on Monday that they would temporarily relax IRS income verification requirements until the shutdown ends, yet, there was little on which to base a speculation about a possible decline in the housing market. Mortgages will be processed as quickly as ever at most institutions and most lenders will accept alternate forms of verification for income, like copies of bank statements, in the interim.
“We’re issuing this guidance to help ensure the continued smooth operation of the mortgage market during the temporary shutdown of the federal government,” Freddie Mac executive vice president Dave Lowman said in a statement.
We will talk next time about what will happen with mortgage rates as the Fed gets ready to slow down its bond purchases, known as Quantitative Easing.
If you still have any concerns please don’t hesitate to contact me via my website at www.americasells.com.
