The verification of employment, Social Security numbers, and more could prove problematic during the partial government shutdown. Fannie Mae released guidance this week to lenders on how they can continue to originate mortgages. The partial government shutdown is now 13 days in and could leave some home closings in jeopardy as Congress continues to be stalled in passing a spending bill that meets the president’s approval.
Fannie also released guidance involving obtaining IRS transcripts and information through the Social Security Administration during the government shutdown. For example, tax transcripts from the IRS can be received after closing, in some cases. But according to the rules, a Social Security number must be validated prior to the sale or Fannie Mae will not purchase the loan.
The government shutdown does not mean borrowers who are employed by the government are ineligible for mortgages during the shutdown, Fannie Mae explains in its letter to lenders. “If a borrower is furloughed on or after closing of the mortgage loan due to the shutdown, the loan remains eligible for sale, provided the lender has been able to obtain all required documentation (for example, pay stubs, IRS W2s, verbal certifications of employments) prior to the delivery of the loan,” according to Fannie Mae.
Some problems may arise in validating a government worker’s employment status during the shutdown. If lenders are unable to obtain verbal verification of employment during the shutdown, for example, the lender can then obtain verbal verification of the employment after the loan closing and up until the time of loan delivery. Fannie’s guidance also states that borrowers in the military can use a Leave and Earnings Statement that is dated within 30 calendar days prior to the note date in place of a verbal verification of employment.
Fannie’s guidance to lenders involving how to proceed with originations in the government shutdown are temporary policies that are effective immediately. “They will automatically expire when the federal government resumes full operations,” according to Fannie Mae’s letter. “If the shutdown lasts for a prolonged period, we may provide additional guidance.”
