I don't know of anyone who purports to like government. Taxes, potholes, lost mail--everyone's got a gripe. But if you have bad credit you should love government, and you should be concerned about an impending shutdown. These days, home loans for people with bad credit are pretty much limited to government loans like VA, FHA, and USDA. But even if you don't have bad credit, mortgage lenders will have a harder time processing and funding your mortgage. If most of government isn't functioning, the following will be affected:

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Income verification - all lenders

Before funding your home loan, most lenders must check your income documentation against what the IRS has on file. It's just too easy to PhotoShop a W-2 and a pay stub, so lenders have to double-check your income. This verification is required by Fannie Mae and Freddie Mac Quality Assurance and any lender that doesn't do this may have to buy back your loan if you default. If the IRS is on furlough, lenders will not be able to obtain tax transcripts. This means your mortgage rate lock could blow while lenders try to verify your income and close your home purchase or mortgage refinance.


I have heard that HUD will probably not support FHA Connection, its automated service for approved FHA lenders, during this down time. Therefore, mortgage lenders will not be able to order case numbers or perform other functions which require this service. Lenders need your FHA loan to have a case number before they can process your application, order an appraisal, or submit your loan to an Automated Underwriting Service (AUS).

Rural Housing (USDA) loans

It is unclear what the impact to USDA's Guaranteed Underwriting System (GUS) will be since that system was created after the last government shutdown in 1995. However, it is expected that the system will not be available. In addition, lenders will not be able to get conditional commitments during the shutdown. This could be a problem--a conditional commitment is given once a state-level USDA underwriter approves the loan, funds are also allocated once the loan is approved. Once you have a conditional commitment, you have 90 days to close your loan or your funds are forfeited!

VA mortgages

The system through which VA appraisals are ordered will not be available.

Fannie Mae and Freddie Mac

They used to be private; now they are owned by the government. They may not be able to communicate with the needed oversight people, so any problems that come up may go unresolved.

Government is a necessary evil, but if you're trying to get a mortgage closed, government becomes a lot less evil and a lot more necessary.