As the longest running government shutdown in American history enters its second month, there’s a lot of confusion and uncertainty surrounding the impact on VA loans. For starters, what is a government shutdown? A government shutdown occurs when members of Congress fail to pass a bill funding the government or when the president refuses to sign a bill.
VA Loans: The Good News
The good news is that, for the most part, home loans, including home loans backed by the U.S. Department of Veteran Affairs, are operating normally. VA home loan lenders are still able to order appraisals, request a Certificate of Eligibility (COE) and submit the VA funding fee.
The VA home loan guarantee program is one service the government says will not be impacted by the shutdown.
“VA is fully funded for fiscal year 2019, and in the event of a partial government shutdown, all VA operations will continue unimpeded,” VA Secretary Robert Wilkie said in a statement. “We thank the president and Congress for their commitment to our nation’s heroes in funding VA, and stand ready to provide all of the VA benefits and services our veterans have earned.”
VA Loans: The Bad News
Some lenders, however, have reported slower than usual response times when dealing with the VA. Then, of course, there’s the issue of income verification and the credit impacts associated with not getting paid during a shutdown.
The government is encouraging lenders to go easy on borrowers struggling to make payments, asking them to waive fee and penalties for late payments and suspend reporting to credit bureaus. Some lenders are extending forbearance to a homeowner having difficulty making mortgage payments during the shutdown.
If you think you’re going to have difficulty making your mortgage payment during the government shutdown, contact your mortgage servicer as soon as possible.
For a complete list of veteran services not impacted by the shutdown, click here.