EXPECT DELAYS IF YOU ARE USING VA, FHA, OR USDA TO GET A LOAN!

If you are applying for a VA, FHA, or USDA loan or already in the process and just waiting for your closing date expect delays. I think we all know this, but just wanted to drive message home as I received this bit of news today which you can read. Let’s hope the government shut down does not have an adverse affect on the Tampa housing market, a market that is still soft in many ways. As always, if you need help selling or purchasing a home in the Tampa area give Richard Kemper with RE/MAX a call at 813-777-5332

 

FHA answers questions about shutdown’s impact

WASHINGTON – Oct. 7, 2013 – The Federal Housing Administration (FHA) says it has received a number of questions about the government shutdown and its impact on FHA loans. As a result, it issued a list of questions and answers:

Can I get an FHA case number?
Yes. Lenders will be able to obtain an FHA case number from the FHA Connection.

Will FHA endorse single-family loans during a shutdown?

FHA will be able to endorse single-family loans, with the exception of Home Equity Conversion Mortgages (HECM) and Title I loans, during the shutdown. A limited number of FHA staff will be available to endorse new loans. Due to limited staff, the time to endorse the cases may be extended.

Will FHA still be able to endorse my loan if I am not able to obtain tax returns verified by the IRS during the shutdown?
Some lenders obtain tax transcripts directly from the IRS when underwriting their FHA-insured loans. But these lenders may be unable to obtain returns directly from the IRS for the duration of the government shutdown.

Lenders may continue originating loans using FHA’s existing underwriting requirements, which have not changed. Lenders must obtain tax returns from certain borrowers in order to originate FHA-insured loans, and the borrower’s signed authorization (i.e., Forms IRS 4506, IRS 8821, or whatever form or electronic retrieval service is appropriate) for any loan for which the borrower’s tax returns are required.

Why didn’t the borrower’s name and Social Security Number pass validation with the Social Security Administration?
When the lender requests a FHA case number, the borrower’s name, date of birth, Social Security Number (SSN) and property address are entered into FHA Connection (FHAC). If the matching process with Social Security Administrations (SSA) fails, a “Case Warning for SSN Validation” will be placed on the case number.

The failure could occur because the data doesn’t match or because the SSA system went offline due to the government shutdown. SSA has limited tolerance for minor mistakes in names, birth dates and social security numbers.

Can the Social Security Number validation be run again?
Lenders can make necessary corrections and try a second time to validate with SSA. Any changes made to the borrower’s name, birth date and SSN at any time prior to insurance endorsement will trigger a validation request with SSA. If the revised data passes validation, the Case Warning for SSN Validation is removed.

However, if the failure was caused by the government shutdown, the Case Warning for SSN Validation will not be able to be removed until the government reopens. FHA will ensure that the validation process takes place and lenders will be advised of the results in FHAC as soon as possible after that happens.

Can I continue to process the loan without the Social Security Number validation?
Lenders may continue processing loans without receiving validation of the borrower’s name and SSN, but FHA will not endorse loans without this validation.

What happens if I cannot validate the borrower’s SSN?
The lender may submit a request for insurance endorsement if confident that the Case Warning was received in error as a result of a system shutdown. The lender must provide conclusive documentation to verify the Social Security number, such as a valid SSN card issued by the SSA; or an original document issued by a federal or state government agency that contains the name of the individual and the SSN of the individual, along with other identifying information to support the validity of the borrower’s name and SSN to the applicable Homeownership Center (HOC).

Lenders may not endorse any loans with Case Warnings for SSN Validation, and FHA will require the lender to submit the case binder for endorsement along with conclusive documentation to verify the SSN.

After viewing the documentation, FHA will endorse the mortgage for insurance if it believes the documentation provided complies with HUD’s regulations and the loan meets all other FHA requirements.

© 2013 Florida Realtors®

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