The Daily Item, Sunbury, PA

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October 5, 2013

Shutdown undercuts mortgage industry's loan approvals

SUNBURY — By Lisa Rein

The Washington Post

WASHINGTON — Beginning this week, thousands of home buyers will be unable to get approvals for their mortgages because of the government shutdown, potentially undercutting the nation's resurgent housing market.

Without paperwork from the Internal Revenue Service, the Social Security Administration and in many cases the Federal Housing Administration, banks and other mortgage lenders will be less willing to make loans, if they can make them at all. Lenders, for instance, rely on the IRS to confirm borrowers' income and the Social Security agency to confirm their identify.

Every day that government offices remain shuttered will delay an ever-larger fraction of mortgage closings, industry leaders say, jeopardizing mortgage and interest-rate approvals and spooking sellers. About 15,000 new home mortgages and 18,000 refinancings on average are completed across the country each day.

On Friday, House Republicans continued to insist on changes to President Barack Obama's health-care program as a condition for funding the government. But with attention on Capitol Hill shifting to an Oct. 17 debt-ceiling deadline, there was no end in sight to the government shutdown, nor relief for prospective home buyers.

"Most people don't really think about, 'Well my loan is going to be underwritten by a federal agency,' " said Marj Rosner, vice president and sales manager at Long & Foster, a real estate firm. "But the government has a huge imprint here."

Major lenders are scrambling to figure out whether they can risk making some loans without the federal paperwork and assessing whether they should require additional documentation from borrowers because the IRS has no one working who can verify income.

Many mortgages were able to close as scheduled this week because the paperwork was completed before federal employees were furloughed, but some home loans have already been frozen.

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