SALT LAKE CITY -- As the federal government shutdown enters its third week, it’s causing problems in a whole new way.
Real estate agents and lenders report some clients can’t buy or sell homes, because of hang-ups in the loan process that require government involvement.
Even people days away from closing, agents suggest, now must wait until the shutdown is over to move forward.
On Friday night when most head home, Michael McPhie sat in his office browsing homes on the market.
As the Right Move Utah realtor burned the midnight oil, he said he was getting ready for a busy weekend.
“This is a lot of what my time is spent doing, is looking at homes,” he said with a chuckle, as he scrolled through houses.
What he’s found himself spending time on lately, has nothing to do with homes.
When the government first shut down, McPhie didn’t think the impact would reach into real estate. Then two of his clients came across problems.
“I got a phone call that everything is being held up, and very quickly realized… ugh,” he said.
One client, McPhie said, was 10 days away from closing on the sale of their home.
“They’re packed, everything’s ready to go,” he said, of his client’s preparation to move. “Now, we have no idea when they're going to be able to actually move.”
McPhie explained one client can’t sell their home because the buyer is waiting on documents from the Social Security Administration, and they have no idea when the documents will arrive because the SSA is not open.
He said lenders can’t verity tax information or get tax transcripts because the IRS is shut down.
Another client of his was set to sell a home to a buyer who now can’t secure a USDA loan.
Lenders like Matt Barrett with Intercap Lending said this could have a huge domino effect. Barrett explained there are certain work-arounds and ways to continue forward with a loan—but in the case of USDA loans, everything is completely on hold until the shutdown is over.
“Sellers--when they’re selling to someone who is obtaining USDA financing to buy the home--that's held up,” Barrett said. “Buyers obviously can't buy the home.”
It leaves the loan and sale of the home in limbo, he and McPhie expressed. They also pointed out that as the loan requests and paperwork pile up, a backlog will force even more delays after the shutdown ends.
“Just super frustrating,” McPhie said. “Everyone's hands are tied.”
And they’ll continue to be tied, until the government opens back up.
