So far the government shutdown has really not caused delays for home buyers trying to get a loan. One of the main issues was that loan guidelines for mortgages backed by Fannie Mae, Freddie Mac, or the FHA required validation through a government agency, so some borrowers worried they wouldn’t be able to obtain a loan. In response to the shutdown, Fannie Mae and Freddie Mac announced relaxed loan policies that will permit closings to go forward without federal verification of Social Security numbers and IRS tax transcripts.
Although we’ve heard of some lenders shying away from approving loan applications due to the shutdown, the good news is there are lenders offering work-arounds for tax documentation on mortgage applications.
Shant Banosian, Branch Manager and Senior Vice President at Guaranteed Rate in Waltham, says his company is temporarily revising their guidelines effective on all conventional Fannie Mae, Freddie Mac, Mass Housing, FHA and VA loans.
Banosian says in lieu of tax transcripts they will accept:
- For W-2 Employees: Full Written Verification of Employment from Employer
- For Self Employed Borrowers: Letter signed and certified by the CPA or Tax Preparer stating tax returns are accurate and correct. This exception does not apply for self prepared returns
- Completed signed 4506-T forms signed and initial application and at closing
- Verbal verification of employment prior to closing
These temporary policy guideline accommodations will automatically expire the date the federal government resumes full operations. Mortgages originated and sold after the date the federal government resumes full operations will be subject to our existing program and policy requirements.
With certain home loan companies like Guaranteed Rate, borrowers will now have more options. This is welcome news for home buyers.
As we mentioned last week on Fox 25 News, during this shutdown all parties involved in the home sale transaction must remain patient. The only way everyone will get through this shutdown to communicate properly and set proper expectations.