The nation’s housing market is being affected by the government shutdown, and those in the industry are calling for a quick resolution in Washington, D.C.
One of the main issues is that tax transcripts processed through the Internal Revenue Service are not being generated. The transcripts are a verification that a potential buyer’s income documentation matches what’s on file with the IRS.
“Lenders that are processing loans that require tax transcripts through the IRS have not been able to do so as the IRS is shut down,” said John Kynor, owner and qualifying broker of Albuquerque’s Q Realty. ”The only loans not requiring [tax transcripts] are [Veterans Administration] loans. [Federal Housing Administration] loans should be okay as long as you have a FHA endorsed lender.”
Most VA operations are taking place as usual during the shutdown.
John Varoz, a mortgage banker with Bank of Albuquerque, said the bank has agreed to close loans without the tax transcript.
“In that regard, we haven’t seen much of an impact. It’s really based on the policy of the bank,” he said.
Varoz said Bank of Albuquerque will pull the transcript after the IRS is functioning again. He added that depending on how other lenders deal with tax transcripts, it would likely impact loans in progress and new applications.
Less visible programs that will be affected, Varoz said, are section 184 loans done for members of American Indian tribes and USDA loans, which are manually reviewed and require guarantees from the Department of Agriculture.
“Those will be on hold indefinitely,” Varoz said.
Both Kynor and Varoz suggested those who are thinking of buying a home, are in the process, or are looking to refinance communicate with their lenders.