As we expected, the mortgage loan process is going to see some changes during the next few weeks that will equal to delays for home buyers and home sellers in North Carolina. North Carolina has Predatory Lending Laws which are different from other States. Because of our “unique” documentation requirements, and laws, the Government Shutdown Affects Loan Applications a little differently in our state.
We were the FIRST state in the Union to require that the loan officer provide evidence that the borrower has the ability to repay the loan. The Loan Officer and the Underwriter are required by NC LAW to provide this evidence.
IRS Transcript Delays Loan Applications 2013
Because of that, the practice in NC is for ALL loans (no matter what kind they are) to include a copy of an official IRS Transcript in the loan file. The transcript assures the Underwriter, and the folks who purchase the loan, that the borrower was absolutely truthful in providing information.
We spoke with the Southeastern Regional Director for Credit Plus, and they confirmed that the Department responsible for delivering IRS 4506 Transcripts is furloughed. The IRS indicated in a call with Agencies yesterday that they would process the 4506Ts in the order they are received, once the Furlough comes to an end.
Without the 4506 Transcript, it will be difficult, if not impossible, to close ANY kind of loan in NC – so if you are in process, I would contact my loan officer, and find out if that form is already in your file.
Fannie Mae / Freddie Mac Loan Delays 2013
Fannie Mae and Freddie Mac do not actually “make” loans. They accept them into their systems for sale, and their income for the programs come from the Lenders who are putting loans through the Fannie/Freddie system. The fees have been raised multiple times in the past 3 years, and the programs are now in a financial position of being seen by some as an ASSET again for the Government. So Conventional loans, and the Fannie / Freddie System should see little to no consequences because of the Shutdown.
Other than that “little issue” about Transcripts in NC – Most of the loan PROGRAMS that will be affected so far, appear to be related to Government loans.
USDA Home Loan Delays 2013
The first group of people affected are all those folks who are already at the USDA Home Loan NC offices, waiting for their mortgage loan application to be approved. The USDA Eligible Area Maps were scheduled to change on – if Congress did not approve a Farm Appropriations Bill as part of the overall Budget – as we all know, that didn’t happen. According to the last update on the USDA NC recording this morning – they were underwriting files received on September 5th. We can only assume once the Government resumes, that’s where they will be.
USDA Home Loans are 100% no down payment required loans, that require:
- That the Property be located within the USDA Eligible Area Map Footprint
- The Household Income must be below the caps for the county you are purchasing a home in
- The Loan must be underwritten BY A USDA HOME LOAN UNDERWRITER
The PROBLEM for folks who are in line at USDA (meaning our clients that the Bank already approved), is that they have likely BEEN in line for several weeks. It’s completely possible, that through no fault of the mortgage company – the documents and credit reports will begin to expire… which means the loan will necessarily be required to be resubmitted to USDA Underwriters in NC for approval.
We contacted Borrowers this morning and notified them that we need for them to stop using credit cards, and do their best to keep their credit picture as similar as possible to the way their file looked when we submitted their loan to USDA. We also sent them a copy of their credit report, and told them when each of their docs are expiring. If you are “in line” at USDA – we suggest that you have this same discussion with your loan officer.
We do not know what the USDA Home Loan process for this re-submission process will be. Will they extend the date on the USDA Eligible Area Maps for folks who were already in line at USDA prior to ? We have no way of knowing.
The USDA Eligibility Website is currently down. We do have Maps that we printed of the Eligible areas in NC, and the areas that were to see changes. These reference materials are (obviously) going to be important if you are in the process of buying a home – and want to see if the property is within the USDA Eligible Areas in NC. We can still accept USDA Home Loan Applications – we can still order appraisals – we just can’t get the loan fully approved until the website, and USDA Underwriters are off their current Furlough, and are back in business. In the meantime, here are some USDA Loan basics.
FHA Home Loan Delays 2013
The FHA Home Loan program has a “special” relationship with Congress, and it is NOT going to see a shutdown. They can go directly to the Treasury for funds, and as long as we don’t exceed the Debt Ceiling on October 17th, the FHA Home Loan Program should keep buzzing right along.
On September 30, the FHA Home Loan program was to request 1.7 Billion from the US Treasury to cover losses that that it sustained from the Reverse Mortgage Program. Because of the massive losses in the past several years, Congress agreed to allow FHA to basically self-monitor it’s financial position. In doing so, FHA has raised the FHA PMI rate 2013 to the highest amount we can recall.
There was a news brief on FOX that the FHA program would be shutting down. That’s wrong. Apparently a draft of the Contingency plans for HUD showed the FHA program closing.
FHA doesn’t actually make mortgage loans. They simply write the guidelines for which mortgages they will guarantee the Bank for, in case someone goes into foreclosure. These are great loans for:
- FHA Home Loans are great for Single Parents who need help with Down Payment
- For those who need some common sense underwriting when it comes to working with their credit report
- FHA Back To Work Program helps folks who lost their job, and had a financial crisis as a result
- FHA offers the ability to add a non-occupying co-borrower for loan approval
- FHA only requires a 3.5% down payment, and they allow that money to come from a Gift.
VA Home Loan Delays 2013
Our Bank is fully approved through the Veteran’s Administration, however, there could be delays. We must order Appraisals through the VA, and then we issue a Notice of Value through the VA system. The NOV system appears to have some “technical” glitches – and this could delay some VA Loans.
Not all Lenders in North Carolina have the Bank’s direct access to the Value System, and therefore, you will want to be sure you are applying with a mortgage loan officer who has full access to all VA Loan systems.
If you are interested in applying for a mortgage loan – call us! Mortgage rates (mortgage bonds) are very low, and with all of this uncertainty, it’s a great time to buy. Call Steve and Eleanor Thorne 919 649 5058 Ask us questions below, or connect with us on Google Plus or Facebook!
First Time Home Buyers – here’s some information about the process involved in buying a home!