How a government shutdown would halt housing loans - KLTV.com-Tyler, Longview, Jacksonville, Texas | ETX News

How a government shutdown would halt housing loans

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TYLER, TX (KLTV) -

If the government follows through with the shutdown, it will create a standstill for a lot of people looking to buy and sell their homes. The struggling housing market is finally improving, but a government shutdown could create uncertainty that hurts consumer confidence.
   
"Not only in East Texas... it would really hurt the market in the whole United States," says Remax Tyler Realtor Jonathan Wolf.

To buy a house, you typically need a loan. Whether it's from the Federal Housing Administration, United States Department of Agriculture, Veterans Affairs or a conventional loan, tax transcripts are required to close the deal and make sure there's no fraud.

However, if the government shuts down, the federal employees who process that paperwork would be sent home.

"They have told us that the IRS will not be issuing tax transcripts, and that impacts everybody," says Deborah Brown, a senior loan officer at Starkey Mortgage.

Brown says the shutdown's impact on rural housing leaves a lot of unanswered questions.

"I have loans over at USDA right now and we don't know. They haven't told us yet if they're going to shut down. If they do, all of those loans are just sitting there in limbo," she explains.

It's a significant problem for buyers, sellers and realtors, but there is another option.

"You could go to a local bank and they could do an in house loan, which we have a great array of that in East Texas. We're very lucky to have great banking institutions," says Jonathan Wolf.

If you're already in a contract, you're less likely to be impacted; if the shutdown is short, it won't make much difference.

"If it's a few days, it's not going to matter. If it's more than 2-3 weeks, then it could affect their closings and that's not good for anybody," says Brown.

At this point, it's still any body's guess whether the shutdown will happen and how long it might last, if it does.

Realtors say a local bank is always a great place to start when getting a mortgage, and some banks don't require tax transcripts, so you might be able to  bypass the problem entirely. Otherwise, if your tax transcripts haven't been ordered yet, there is only a slim chance you'll have them before the shutdown deadline.

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