As we enter the 7th day of the government shut down, concern grows among home buyers and sellers as to how this may affect the transactions here in St Louis. The short answer is that, fortunately, it appears the impact will be minimal for the most part. This morning at a meeting of the St Louis Industry Forum, which I chair, this topic was discussed and from the input of the real estate-related professions represented, it appears the impact of the government shutdown on real estate transactions here will be minimal.
Shelly Clark, President of Cardinal Surveying, said that there should not be any impact on obtaining a survey, however there will be some impact for homes located in a flood zonewhere an elevation certificate is required. The problem here is, in order for most local survey companies to produce an elevation certificate they need to submit field data to NASA for them to process and return data to the survey company to complete their calculations. While this division of NASA is apparently still operating, as dumb as it sounds, the people that email the info back to the survey company are not working, therefore the information will be calculated by NASA but not sent to the surveyor. (I would have guessed someone at NASA knew how to send an email but…)
Celeste Reuter, Governmental Affairs director for the St Louis Association of REALTORS, said that information from Fannie Mae, Freddie Mac and VA indicated there should not be any major impact on home mortgages from the shutdown as they are waiving the requirements of lenders to obtain social security number and tax return verifications (neither of which are currently available) prior to closing. However, the catch is, the lender can’t sell the loan to Fannie Mae or Freddie Mac until the government re-opens and these verifications are available again, therefore there could be some risk to lenders as a result which may cause problems for some borrowers.
Shedding a little more light on the home loan issue in an email, Ruth Battle, Senior Vice President at Paramount Mortgage, reiterated that for Fannie Mae, Freddie Mac and VA loans it should be pretty much “business as usual”. She did point out however that FHA is operating but with a smaller staff which will cause delays, particularly in getting loans approved. For lenders that have their own underwriters on site (such as Paramount Mortgage) this will not cause a delay for borrowers, even on FHA loans.
For rural areas that depend on USDA loans, it is a different matter. There will be no new USDA loans approved during the shut down.
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