What the Shutdown Means for Mortgages

Your loan may be all ready except for one thing. And that will stop you from closing.

Remember the mortgage mess of the last decade? One of the major issues was that there was a ton of fraud based on people making up tax returns.

The lenders then got smart and said that they will verify with the IRS that the 1040’s, 1120’s etc that you filed, will be reverified directly with the IRS.

For all loans that submit returns (and even w2s in some cases), there is form 4506T that is sent either by mail or electronically.

But now, there is no one at the IRS to send the transcripts back. Yes, you’re hosed. No transcripts, no closings.

Done.

You can’t shop lenders that do and don’t do it. They all do. There are no more owner occupied no income verification loans (Dodd-Frank). Investors can get a no income and then refinance.

Have a home under agreement that s getting a mortgage, first of all, get an extension and extend the rate. Yes, it probably will cost you to extend but until the shutdown ends and the IRS gets caught up, you’ll be waiting.

Some lenders may close on a W2 based on the fact that they get income verification from outside sources that don’t come from a borrower or employer but if you have tax returns, no chance.

I’ll keep on this and see if there are other ways and let you know. Stay tuned!