Shutdown Updates From Freddie Mac and HUD

Freddie Mac wants its customers and businessrnpartners to know they are open for business and largely unaffected by therngovernment shutdown.  Despite theirrnconservatorship status, Freddie Mac and Fannie Mae are still private businessesrnand operate outside of the federal appropriations process.  While the guidelines for USDA aren’t yet clear, The Department of Veterans Affairs will remain open.</p

Not so for thernDepartment of Housing and Urban Development which sent out a short note sayingrnthat most HUD programs have been temporarily interrupted and most employeesrntold they cannot work.  Obviously loansrnbeing processed through the Federal Housing Administration (FHA) willrnbe delayed.  </p

Freddie Mac issued a press release this morning outliningrnareas where loan originators and servicers may encounter problems arising fromrnthe shutdown and offering suggestions to minimize any inconvenience to themselvesrnor their borrowers.  Probably mostrnimportant is the notification to servicers that borrowers who are affected byrnthe shutdown are eligible for the usual relief options in the company’s Single-Family Seller/Servicer Guide (Guide).</p

Lendersrnare advised that they do not need to obtain employment verification orrnre-verification for a loan to a government employee prior to closing if therngovernment office that must provide the verification is closed when the loan isrnscheduled to close.  Nor do they need tornobtain that verification after the shutdown ends.  Freddie Mac says this exception does notrnapply to income verification or any other requirements and reminds lenders theyrnremain bound by the representations and warranties as stated in the Guide.    </p

Lendersrnneeding an executed IRS Form 4506-T, Request for Transcript of Tax Return only need to have it signed by the borrowerrnnot processed by IRS prior to closing. rnHowever, the actual 4506-T information must be obtained.  Servicers must have that form or the EZrnversion as applicable, processed by the IRS prior to evaluating a borrower forrnthe Home Affordable Modification Program (HAMP) or other workout option ifrnprocessing of these forms is required.  Ifrnthe servicer is unable to obtain tax transcripts from the IRS throughrnelectronic processing of an executed form then they must obtain a copy of therntax return from the borrower, if required.</p

FreddiernMac said they will provide updates if they find that any of their businessrnpractices are impeded by the current government interruption.

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