If the government shuts down, lenders would still be able to process and close VA-backed mortgages, says Barbara Sheehan, assistant vice president of mortgage products for Navy Credit Union in Vienna, Va.
Sheehan says she doesn't expect borrowers to encounter major issues when they try to close on a VA loan next week, as long as the Department of Veteran Affairs' electronic system, used to process the loan files, remains operational during the shutdown.
"In reality there is not any direct interaction with the VA during the origination and processing and closing of the loan," she says. "If the system works, we should be fine. The most important thing is we have to get an appraiser assigned to us from the VA system," and that is done automatically through the system.
She says her credit union plans on funding and closing on the loans and, if necessary, waiting for government to resume operations to get the loans guaranteed.
But not all lenders will do that. They have the option of not closing until they have approval from the government that the loan they are originating would be guaranteed.
Lenders who provide VA-backed mortgage loans also often require verification of income with the IRS. If that hasn’t been done it could delay your closing. (Read my previous blog on this here.)
In the event of a government shutdown, most U.S. Department of Agriculture activities would be shut down or significantly reduced and most USDA employees would be furloughed, according to the agency.
That includes the process of approving USDA-backed mortgage loans.
If you have a USDA loan scheduled to close early next week, most of the work on the USDA’s side has been completed, so you will likely not encounter any problems. But any files that are not processed by the USDA by Friday will most likely be put on hold, which would delay closings.