David Saks: What Has It Done & What Will the Government Shutdown Do to Homeowners?

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

What Has It Done & What Will the Government Shutdown Do to Homeowners?

 

 

Everyone's asking:

"What will the government shutdown do to our nation's homeowners, and what damage has it already done ?"

Will everything continue to run smoothly ?

Not really !

Perhaps to a degree for Fannie and Freddie purchasers since the GSE's (government-sponsored enterprises) are owned by shareholders and privately run.

Homeowners are jittery, though.

There's a lot of uncertainty and fear.

Interest rates are rising, too.

Rapidly.

 

Now some bad news.

HUD (the US Department of Housing and Urban Development) runs the FHA (Federal Housing Administration).

Almost all of the HUD employess were laid off.

90% of them.

What does this mean.

Well, it's not good.

HUD applications can't be processed quickly.

Some won't even be reviewed until the shutdown ends.

And then, it'll take much longer to shuffle through the millions of pages of backed-up paperwork involving those applications.

And Social Security Numbers can't be verified.

With nearly 20,000 Social Security Employess laid off, verification is a divisional service of the Social Security Administration that cannot be performed.

To make things worse, the form used by lenders to verify a borrowers’ income, before they get to the closing table, 4506-T, can't be processed by the IRS (Internal Revenue Service) until the crisis ends.

Closing may be halted without form 4506-T.

I predict that the shutdown will increase foreclosures because of the inability to refinance for many homeowners since they,  their lenders and mortgage servicers will not have access to vital information and the documentation needed to close.

The tragic loss of employment for hundreds of thousands of government employees will imperil their housing.

 

-David-

 

 

 




David Saks



Time&Temp Memphis

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Comment balloon 8 commentsDavid Saks • October 10 2013 12:09PM

Comments

David- Hope for the best, prepare for the worst!

 

 

Posted by David Harper, Homes For Rent (Florida Management and Consulting Group Inc.) over 6 years ago

Thank you, David. Great words !

Posted by David Saks ((retired)) over 6 years ago

David, not a good situation at all!  There will be lots of people who won't be able to move as planned because of closing delays that are not their fault.

Posted by Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES, Florida Waterfront and Country Club Living (Tropic Shores Realty - Ich spreche Deutsch!) over 6 years ago

I have a FHA Loan Closing next week.  The Buyer and Seller are on pins and needles.

Posted by Fred Griffin Tallahassee Real Estate, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) over 6 years ago

Here's a snapshot of where Freddie was at yesterday, Silvia, from Credit Sesame.

Delays will occur.

Posted by David Saks ((retired)) over 6 years ago

I hope they're wearing lead shorts, Fred :-)

Seems the crisis will loom.

Posted by David Saks ((retired)) over 6 years ago

David, I think the big takeaway, especially for FHA borrowers is that they may not get their home due to rising rates.  THey usually don't have the money to increase the down payment and lower the loan amount.

Posted by Gary Frimann, CRS, GRI, REALTOR and Broker (Eagle Ridge Realty / Signature Homes & Estates) over 6 years ago

Rate spikes'll impede the loan qualification process, Gary, change the DTI formulas and weaken your borower's buying power. Ouch.

Here come a gadzillion of those darned creative loan products again like we saw thirteen years ago..

Ughhhh.....I think I'm getting too old to play 'Real Estate - The Game" anymore

The realtor board president has been encouraging me to start playing the piano for a living.....

Posted by David Saks ((retired)) over 6 years ago

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