Real Estate Marketing & Beyond
Fannie Mae has issued guidance to lenders this week, explaining how they can continue to originate mortgages during the government shutdown. The guidance is necessary because verification of employment, social security numbers and other details could be troublesome at this time, officials said.
The partial government shutdown has now been ongoing for 14 days, and some are worried that closings could be put in jeapoardy as Congress continues to debate a spending bill proposed by President Donald Trump.
Fannie has also released guidance involving obtaining IRS transcripts and information through the Social Security Administration during the government shutdown. For instance, tax transcripts from the IRS can be received after closing, in some cases. But according to the rules, a Social Security number must be validated prior to the sale or Fannie Mae will not purchase the loan.
Still, Fannie insisted that the shutdown doesn’t mean that borrowers employed by the government would be ineligible for a mortgage.
“If a borrower is furloughed on or after closing of the mortgage loan due to the shutdown, the loan remains eligible for sale, provided the lender has been able to obtain all required documentation (for example, pay stubs, IRS W2s, verbal certifications of employments) prior to the delivery of the loan,” Fannie Mae said in its letter.
Problems might arise while trying to validate a government worker’s employment status, but Fannie said that if lenders cannot obtain verbal verification of employment, they can do so after the loan has closed and up until the time at which the loan is delivered.
In addition, borrowers in the military can also use a Leave and Earnings statement dated within 30 days prior to the note date, instead of verbal verification of employment.
Fannie said its guidance is temporary for the duration of the government shutdown, and is effective immediately.
They will automatically expire when the federal government resumes full operations,” Fannie Mae said. “If the shutdown lasts for a prolonged period, we may provide additional guidance.”
That’s great that Fannie says that but I’m a lender and I’m not allowing loans to close to employees who are furloughed until they go back to work. It’s not Fannie’s money at closing.