Shutdown delays real estate closings
The federal government shutdown has made it difficult for some Realtors to close deals on certain properties, especially in rural areas.
It's been more than two weeks since the federal government shutdown, causing delays for Realtors across the country, whose clients are seeking federal loans.
Bette McTamney, president of the Lemoyne-based Pennsylvania Association of Realtors, said the longer the federal government remains shut down, the more difficult it will be to get certain paperwork and funding processed.
“Right now, we're dealing with it, but if the shutdown goes on much longer, things will get worse,” McTamney said. “Hopefully, by the end of the week, the federal government will make a decision and get back to normal.”
During the government shutdown, United States Department of Agriculture (USDA) employees, which process loans for some rural real estate purchases, were furloughed, without pay. It caused the agency's loan processing to come to a near standstill, McTamney said.
The shutdown keeps the USDA from accepting new loans, and is slowing the process to disburse payments for loans approved prior to the shutdown, McTamney said. Without final approvals from the USDA, anyone attempting to purchase a house with a loan from the organization cannot close their deal, she added.
“If a loan was already committed and the money was promised prior to the shutdown, most of those properties are closing and aren't becoming a major issue,” McTamney said.
Other agencies handling mortgages and loans, such as the Federal Housing Administration, are functioning, but could be delayed by different government entities being furloughed during the shutdown, McTamney said.
Typically, loan agencies need transcripts from the Internal Revenue Service and Social Security to process a mortgage, while some commercial loans need final approval from the Small Business Administration. The agencies have been shut down, McTamney said.
“You don't even realize some of the areas that are government run, and now closed down, and things are getting tough,” she said. “But the longer they remain shut down, the more of an effect it will have on Realtors.”
Parks Denardo Jr., a Realtor with Denardo Realty in Ford City, said the USDA shutdown could cause the most delays in rural areas, such as Armstrong County.
“It's going to take some time, and buyers and sellers have to know if they're going to be wiling to wait for federal loans to go through,” Denardo said. “It can really become frustrating for everyone, including the Realtor, who is trying to help.
“But when a Realtor has nothing to report to their buyer and seller, all parties tend to get antsy.”
Although there are other ways to attain funding to purchase a property, such as private bank loans, Denardo said it is best to meet with a Realtor and a mortgage or loan officer to discuss their options.
Once the shutdown concludes, Denardo said he expects most agencies to become backlogged, which could delay the closing process further.
“So many approvals are probably just sitting there, waiting to be looked at,” he said. “The typical USDA transaction takes about 45 days, and now you could add another 14 days, or perhaps even longer, depending on how long it takes the government to get back into full swing.
“It's harder to keep a transaction together when it runs past 60 days, especially today, where everything is based on instant gratification.”
Brad Pedersen is a staff writer for Trib Total Media. He can be reached at 724-543-1303 ext. 1337 or at email@example.com.