Deal Reached in Government Shutdown: Mortgage Disaster Averted

Republicans and Democrats in congress agreed to lift the debt ceiling and restore the funding required to run the government. For mortgage customers with an application in progress, this is good news. There are three reason why the government shutdown could affect a potential borrower. The first is that all applications for a government mortgage like FHA, VA, and USDA loans require income verification via an IRS form 4506T. This form is required to check the income claimed by the borrower against the income reported to the IRS. Any discrepancy here will require an acceptable explanation. The next reason is a social security number validation from the social security administration. For obvious reasons, this prevents identity theft and verifies eligibility for government loans such as citizenship. The last reason is address verification via the US post office.

Most mortgage banks introduced stop-gap measures to suspend these requirements, however it was only a temporary plan and no one was sure what would happen if a loan was originated that later had issues with any of these verification's. Thankfully, since the government has been restored, we won't have to find out. 

Get Serious about Cleaning up your Credit.

There is a new article about cleaning up your credit before getting a mortgage. Always consult your mortgage lender before and after a credit cleanup program. Sometimes it is something you should do, but a lot of times it is best to "let sleeping dogs lay". This is because activating an old account can cause the date of last activity to update, which will bring down your score.