Lingering shutdown may hit real estate sales
Realtors and mortgage specialists say a prolonged government shutdown could slow home sales in New Hampshire.
“If the shutdown lasts a week to even 10 days, I don’t think there will be that much of a noticeable effect for home buyers and sellers,” said Kim Riddell, a senior mortgage planner with Regency Mortgage in Hooksett. “Anything beyond that is when we could start to run into problems.”
Realtors feel it’s too early to know the true effect the shutdown will have on anyone seeking a mortgage through the Federal Housing Administration (FHA).
“We had a meeting about the shutdown on Tuesday, and we all agreed we weren’t seeing any real effect right now,” said Gail Athas, president of the Greater Manchester/Nashua Board of Realtors. “The real question is where we’ll be a few weeks from now if the shutdown isn’t resolved, and the answer is I don’t think anyone truly knows.”
Some Realtors fear thoughts of economic doom and gloom associated with the shutdown — the debt ceiling deadline later this month — could scare away some buyers.
“As we’ve witnessed over the past five or six years, general uncertainty can affect consumer confidence, which in turn carries the potential of an impact on the real estate industry,” New Hampshire Association of Realtors (NHAR) President Bill Weidacher said. “Though we can’t know to what extent that impact would be, we hope it will be short-lived.”
Dave Cummings, director of communications for the NHAR, said this week the website for the National Association of Realtors posted details of the contingency plan of the Department of Housing and Urban Development, which stated, “FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multifamily Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. You can expect some delays with FHA processing.”
Athas said she thinks potential buyers looking to secure a loan through the Rural Development program will be most affected by the shutdown, at least initially.
Lenders will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown.
A conditional commitment, good for 90 days, is given to a lender once a USDA underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.
“It’s the program where you put no money down, and it’s one of the most popular out there for first-time home buyers,” Riddell said. “Since the shutdown, we can’t close on an R.D. loan at all.”
Riddell also said it could become difficult in the coming weeks for mortgage specialists to receive tax forms they need for loan applications.
“There’s one document we all need to have — IRS form 4506-T,” Riddell said. “We ask for tax returns and W-2 forms for the past two years, and then we ask the IRS to verify the information using the form. But if the IRS the IRS isn’t open, the forms can’t be verified. It remains to be seen whether investors would be reluctant to approve a loan without that paperwork. The truth is right now we just don’t know.”