Shutdown Updates From Freddie Mac and HUD

Freddie Mac wants its customers and business partners to know they are open for business and largely unaffected by the government shutdown.  Despite their conservatorship status, Freddie Mac and Fannie Mae are still private businesses and operate outside of the federal appropriations process.  While the guidelines for USDA aren't yet clear, The Department of Veterans Affairs will remain open.

Not so for the Department of Housing and Urban Development which sent out a short note saying that most HUD programs have been temporarily interrupted and most employees told they cannot work.  Obviously loans being processed through the Federal Housing Administration (FHA) will be delayed. 

Freddie Mac issued a press release this morning outlining areas where loan originators and servicers may encounter problems arising from the shutdown and offering suggestions to minimize any inconvenience to themselves or their borrowers.  Probably most important is the notification to servicers that borrowers who are affected by the shutdown are eligible for the usual relief options in the company's Single-Family Seller/Servicer Guide (Guide).

Lenders are advised that they do not need to obtain employment verification or re-verification for a loan to a government employee prior to closing if the government office that must provide the verification is closed when the loan is scheduled to close.  Nor do they need to obtain that verification after the shutdown ends.  Freddie Mac says this exception does not apply to income verification or any other requirements and reminds lenders they remain bound by the representations and warranties as stated in the Guide.   

Lenders needing an executed IRS Form 4506-T, Request for Transcript of Tax Return only need to have it signed by the borrower not processed by IRS prior to closing.  However, the actual 4506-T information must be obtained.  Servicers must have that form or the EZ version as applicable, processed by the IRS prior to evaluating a borrower for the Home Affordable Modification Program (HAMP) or other workout option if processing of these forms is required.  If the servicer is unable to obtain tax transcripts from the IRS through electronic processing of an executed form then they must obtain a copy of the tax return from the borrower, if required.

Freddie Mac said they will provide updates if they find that any of their business practices are impeded by the current government interruption.