As the government shutdown reaches its 13th straight day, mortgage giant Fannie Mae has issued new policies and guidelines for loan originations during the period.
Congress and President Donald Trump have failed to come to an agreement on a new funding bill, with the president refusing to sign a bill without funding being allocated to a border wall.
“We are providing temporary guidance on selling and servicing policies that may be impacted by the federal government shutdown that occurred on December 22, 2018,” Fannie Mae said in a letter to lenders, according to HousingWire.
“This guidance assumes that the shutdown will be temporary in nature. These temporary policies are effective immediately, and will automatically expire when the federal government resumes full operations. If the shutdown lasts for a prolonged period, we may provide additional guidance.”
The company revealed that a government shutdown has brought new policies regarding document verification through government agencies such as the IRS or Social Security Administration. These policies include:
IRS Transcripts: We require lenders to have each borrower (regardless of income source) complete and sign a separate IRS Request for Transcript of Tax Return at or before closing, except when all of a borrower’s income has been validated by the DU validation service. We do not require lenders to obtain tax transcripts from the IRS prior to closing, but do require that it be included as part of the lender’s post-closing quality control processes (unless all borrower income has been validated through the DU validation service). As part of the DU validation service, DU can validate certain income types using tax transcript data obtained from an eligible verification report. As a result of the shutdown, requests for those verification reports may not be fulfilled with the IRS and may remain in pending status until normal operations resume. DU will continue to return validation messages for tax transcript verification reports received before the shutdown, but will not be able to access any new verification reports for validation.
Social Security Number Validation: When data integrity issues pertaining to the borrower’s Social Security number are identified, a lender may be required to validate the Social Security number with the SSA using SSA-89. Because these requests may not be processed during the shutdown, Fannie Mae is temporarily revising this policy to enable lenders to obtain the verification prior to delivery of the loan. If the Social Security number cannot be validated prior to delivery, the loan is not eligible for sale to Fannie Mae.
To learn more about the new policies and guidelines for lenders and borrowers during the government shutdown, click on the image above.