With lenders unable to access important documentation needed to process and approve mortgage applications, the federal government shutdown could significantly stall the housing recovery if it is not resolved quickly, says David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA).
Stevens, therefore, is calling on congressional leaders to arrive at a budget agreement and end the shutdown as quickly as possible.
‘Lenders processing loans that need tax transcripts, social security number verification, or FHA home loans face longer delays and reduced functionality from HUD, IRS and the Social Security Administration,’ as a result of the shutdown, Stevens says in a statement on the MBA's website.
‘Different loan programs have different requirements, and these disruptions impact lenders in different ways, leading to confusion and fear among borrowers about whether they will be able to close on a home purchase or refinance,’ he adds. ‘There are significant impacts on multifamily lenders, as well. Rental housing properties awaiting FHA financing cannot move forward.’
Stevens says the longer the shutdown continues, the greater the impact it will have on the housing market.
"The furloughs can disrupt time-sensitive mortgage transaction deals by interfering with borrower lock agreements and causing interest rate disparities from the time of closing to the time the loan is securitized,’ he says. ‘For these reasons there must be a resolution so that borrowers and lenders are able to return to business as usual.’
As of 3:45 p.m. Thursday, the third day of the shutdown, congressional leaders appeared no closer to approving a spending plan than they were at the start of the budget talks. According to CNN, President Barack Obama had earlier in the day challenged House Speaker John Boehner to end the shutdown by bringing up the spending plan previously approved by the Democratic-led Senate.
Boehner, however, is reportedly insisting that the Senate reconcile its plan with that of the Republican-led House, which includes provisions pertaining to ObamaCare.