7 On Your Side
Homebuyers face uncertainty with gov't shutdown
SAN FRANCISCO (KGO) -- The shutdown of the government is impacting many home buyers and sellers who face uncertainty about when mortgages can be approved and their sales closed.
Before a loan can be closed, the lender needs to get a transcript of your federal taxes. With nearly 91 percent of Internal Revenue employees furloughed right now, that's all but impossible to get.
Alex Schroeder put it bluntly. He's is ticked off about the government shutdown.
"Every single move on their part I think is a farce and it's shameful. It's a completely shameful way to behave," said Alex Schroeder Futures Design.
Schroeder buys and sells homes for a living. He's what's popularly known as a "flipper," which means he buys distressed homes, rehabilitates them and then sells them for a profit. He made his latest sale just last week, but now the government shutdown has put it in doubt.
"It puts it in uncertainty which is pretty serious because that's my source of income," said Schroeder.
Here's why. Before the loan can close, the social security number must be verified. But the Social Security Administration is under partial shutdown with 29 percent of its workers furloughed.
A transcript of the taxes of the buyers is also needed from the IRS for income verification, but the agency is only staffed at 10 percent.
"We need to get past the social security check and the IRS check in order for the Veterans Administration to invest the time to go through the rest of the loan process," said Schroeder.
One lender at Alain Pinel we talked to estimated that one out of four loans in California are government backed by the Veterans Administration or Federal Housing Administration. Those loans are now in limbo due to the shutdown. Other lenders have the same requirements, but are being more flexible.
Some lenders have reportedly waived the transcript requirement. You should check with your lender about how it is handling the government shutdown. With each passing day of the shutdown, Alex is feeling more pressure.
"We need this sale to go through. We need it go through quickly. The money is tied up. We want it to roll into the next project as soon as possible," said Schroeder.
After going through this, point after point, we have received word that CalVet home loans are not affected by the government shutdown, so there is some good news there.
government shutdown, loans, housing market, IRS, 7 on your side, michael finney
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