How Government Shutdown Affect Homebuyers
Many Americans remember the last government shutdown during the Trump Presidency a few years back. Never in history was Congress so divided as it was when President Donald Trump was the 45th President of the United States. Is the government shutdown over?
In the last government shutdown, the mortgage markets got greatly affected. USDA loans almost came to an abrupt halt due to USDA mortgage underwriters being laid off. USDA operated on a skeleton screw. USDA was nearly completely closed until the government reopened. President Donald J. Trump had to come to terms with Chuck Schumer and Nancy Pelosi over reopening the government.
Are we going to have future government shutdowns? Is the political turmoil over? How will the government shutdown affect the housing and mortgage market? You can bet we are going to have future government shutdowns. The following paragraphs will cover the previous government shutdown and how future shutdowns will affect the mortgage markets.
How Government Shutdown Affects Americans Getting a Mortgage and The Housing Market
The government will reopen for three weeks during President Trump. The Crazy Democrats will try to negotiate border security funding. What will happen after three weeks? Will there be another government shutdown affecting mortgage lending? Will the government shutdown affect USDA loans again? Will USDA be closed? Will government shutdowns Affect USDA loans and impact homebuyers? Government Shutdown Affecting USDA Loans continue in weeks to come? These are unanswered questions that nobody knows.
How Government Shutdown Affecting USDA Loans Affected Homebuyers
This partial shutdown affected homebuyers pre-approved for USDA loans and under contract. All USDA Mortgage Underwriters were furloughed during the shutdown. Since Crazy Schumer and Pelosi temporarily agreed to reopen the government with President Trump’s offer, USDA will reopen. But for how long? Closing USDA loans during the shutdown was not possible. Will home buyers have an issue in three weeks?
How USDA Underwriting Process Works
USDA loans are one of the most popular loan programs in the U.S. for homebuyers buying homes in rural areas. USDA allows no money down and 100% financing. Getting a USDA loan closed was worse than pulling teeth on the last shutdown.
There are two sets of underwriting processes for USDA loans. The lender does their mortgage underwriting. After the lender’s underwriter signs off on the file, it is sent to a USDA government mortgage underwriter for final approval.
With seller concessions and lender credit, borrowers often do not need any closing costs on home purchases. The team at Non-QM Mortgage Brokers can often get USDA homebuyers in a home with zero money out of pocket. USDA is a government agency that creates mortgage guidelines on USDA loans.
What Is The GUS Automated Underwriting System?
GUS is the automated underwriting system for USDA loans. Borrowers need to meet all USDA Agency Guidelines and get approve/eligible per GUS to qualify for USDA loans. Angie Torres, the national operations director at Non-QM Mortgage Brokers explains about GUS and their underwriting mortgage process:
GUS AUS will list a set of conditions on the conditional loan automated approval. The mortgage processor will gather all conditions listed on the conditional approval and submit it to the mortgage underwriter.
After the mortgage underwriter reviews the conditions and feels confident borrowers meet all guidelines, it is then sent to a regional USDA mortgage loan processing office.
Mortgage Underwriting Process on USDA Loans
Will a shutdown affect home mortgage loan borrowers and the mortgage process? The past shutdown affected all loan programs. The most affected were USDA loans. USDA loans have two sets of mortgage underwriting processes. A government USDA mortgage underwriter will review the file.
USDA loans get underwritten by the lender’s underwriter, the USDA mortgage underwriter needs to do a government USDA mortgage underwrite for it to be insured. USDA underwriters may request clarification or additional conditions. All mortgage lenders need to follow the above process on USDA loans.
SDA Underwriters are not working during the government shutdown affecting USDA loans. USDA underwriters not working is why USDA loans cannot close. No matter how solid and qualified a USDA borrower is, USDA loans cannot be funded without USDA underwriters’ final underwrite.
Did USDA Get Back To Business As Usual After Shutdown
Will the next government shutdown affect USDA loans? Will the next shutdown affect other loan programs? It is not just mortgage loans the government shutdown affects but everything that involves the housing and mortgage markets. It is not if we will have another government shutdown, but when.
It took a compromise to open the last government shutdown between President Trump, Schumer, and Pelosi is a three-week trial period. Chuck Schumer and Nancy Pelosi, who previously supported border security funding under the Obama Administration, did a 180 and did not budge on border security funding. This was mainly due to their hatred of President Trump.
The President gave in and agreed to reopen the government for three weeks in hopes of coming to terms with the 3-week funding to get border wall funding. If there was no resolution in the three weeks agreed upon, the shutdown affecting USDA loans would have continued and could have gotten shut down again. Another shutdown will again close USDA offices. Thus, it will affect home buyers not only with USDA loans but all mortgage loan programs. We will keep our viewers at Non-QM Mortgage Brokers informed as news develops.
