As the clock ticks down toward a government shutdown, FHA and USDA lending programs could be stalled or stopped if it happens. It appears that VA lending will proceed.
Although we know that FHA Connection (the conduit to FHA lending) will be operational during any shutdown of the government, the ability to do CAIVRS (Credit Alert Verification Reporting System) checks will be unavailable according to the most recent information through HUD. Without a clear CAIVRS check, an FHA loan cannot be completed.
CAIVRS alerts participating Federal lending agencies when an applicant for credit benefits, or for a position of trust in support of the administration of a Federal credit program, has a Federal lien, judgment or a Federal loan that is currently in default or foreclosure, or has had a claim paid by a reporting agency.
The VA has stated that there will be no delay in processing for veteran home loans.
USDA has advised us that lenders will be able to close loans for which they had already received a commitment. However, lenders will not be able to get the Loan Note Guarantees for them until the shutdown is over. If the loan does not have a commitment, there could be a stoppage, especially since the computer program used for USDA automated approvals, GUS (Government Underwriting System) will not operate during any shutdown.
Let me know what you think about the shutdown and what will be happening in the government loan arena.