October 4, 2013 : Government Shutdown and Your Home Mortgage Closing Update

As a Chapel Hill Mortgage Lender, I am always looking out for the latest news to help my clients. One more of our lenders said they will waive the IRS Tax Transcript requirement for now.

If you were lending your own money, would this fine print concern you? “We will obtain tax transcripts on all loans when the federal government shutdown ends. Once tax transcripts are received, we will compare the income documents to the transcripts and loans with discrepancies may be subject to repurchase.” Certainly some risk and reward going on for lenders who close loans without Tax Transcripts. Chapel Hill Mortgage Lender

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This is an evolving situation and we are seeing mortgage lenders addressing the government impasse and not having access to IRS Tax Transcripts.

There is also an additional problem for Government employees that has not been resolved as of this writing. The reality of the fraud risk vs the financial pain of not closing loans has come into play.

We now have four national lenders who are allowing loans to close without Tax Transcripts.

As a Chapel Hill mortgage lender part of the Corporate Investors Mortgage Group team, we provide in-house underwriting and loan approvals that follow the policies of our 9+ National Mortgage Lenders.

What To Expect With Your Mortgage Processing

Underwriters will require the signed and unexpired 4506-T at closing. They will also review all tax returns, schedule E’s and C’s carefully. There will be additional due diligence.

A New Mortgage Problem for Government Employees

Verbal Verification of Employment (VVOE) are required before mortgage loans close to insure the borrowers are still employed at the time of closing. We have one investor who has confirmed they will not “purchase” a loan without the VVOE. They are “seeking further guidance” as most investors are.

Should you change mortgage lenders if your closing will be delayed because the IRS 4506-T transcripts are still required?

I recommend waiting. The pressure is building and I believe that more investors will adjust their IRS Tax Transcript policy requirements.

Your mortgage rate lock could expire.

This means “lock extensions” which could be anywhere from .125%-.375% of the loan amount, depending upon the extension period needed. This is a “no fault” situation so how lenders, sellers, and borrowers work out the cost of extension will be determined on an individual basis.

October 1, 2013 Government Shut Down and Your Home Mortgage Closings

All agency loans will be affected. Investors require IRS Tax Transcripts for fraud prevention. Without them, an agency loan will not be approved or closed. This will impact any loans in process where the transcripts have not been pulled early. This will also create a backlog and jam once the ShutDown is over. If you’re looking for a Chapel Hill Mortgage Lender to help you get the right mortgage,

If you’re looking for a Chapel Hill Mortgage Lender to help you get the right mortgage, contact me today.

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