The United States Government shutdown earlier this month after Congress was unable to pass a spending bill. It was the second time in five years that partisan politics got in the way of funding the federal government. This has led to lots of questions about how a government shutdown affects veterans, including those trying to obtain a VA home loan.
For many borrowers, a VA home loan is their only option, so a government sequester can be scary. Fortunately, a government shutdown should have little to no impact on the VA home loan process as long as the shutdown doesn’t last for an extended period. The current shutdown lasted less than three days while the 2013 shutdown lasted 16 days. Neither of these shutdowns affected the VA loan process. However, that wasn’t always the case. A shutdown more than two decades ago caused real havoc among borrowers and lenders when the VA and FHA offices closed down.
Since the 1995 shutdown, VA and FHA have revised their shutdown policies, classifying home loans as “essential services.” Consider the following:
- The Veterans Field Guide to Government Shutdown makes it clear that loan guarantees made by the VA will not stop during a sequester.
- While the VA guarantees loans, it’s not an actual lender. All loans and processed by actual lenders, which do not close during a government shutdown.
- The Department of Housing and Urban Development (HUD) has started that home loan endorsements are an “essential services” during government shutdowns.
Government shutdown and your VA home loan
On the off chance that the government shutdown lasts for an extended period, it is possible to see some delays in processing a VA home loan. Even though the U.S. Department of Veterans Affairs (VA) is considered an essential service, it still operates at a reduced capacity during shutdowns. This means it could take longer to process paperwork.
For more information on how the VA processes home loans during a government shutdown, visit www.va.gov.