The Government Shutdown and the Mortgage Industry - Can the evil lobbyists actually be working in your best interest?

January 16, 2019


Buying a home is stressful.  Selling a home can be even more stressful.  One of the most frequently asked questions we receive is, "How do we sell our home and buy another home without ending up homeless in between?"  And that's when we go to work - setting up the dominoes so they fall at exactly the right time, the pieces all coming into place to ensure our clients have a seamless transaction.  But sometimes we're not the only ones with our hands on those dominoes.  We work with a team, placing our pieces, escrow placing theirs, the lender(s) placing theirs, and so on.  When a buyer buys a home, often that seller needs to find a replacement, often the seller of the replacement needs to find theirs, and so on.  But what if someone who wasn't even a player came in and put a block right as you were about to see all those pieces fall perfectly?


That's essentially what happened with the current government shutdown.  All these buyers, sellers, agents, lenders, escrow officers, appraisers, and more had all done their job but it came to a screeching halt when the IRS could no longer verify a borrower's income due to their workers being furloughed.  You put all this time into choosing the right agent to advocate for you, finding a lender you trust, you answer their calls, spend hours upon hours providing documentation, line up school transfers, moving companies, pack up your life, and a government entity you have no control over can shut it down just like that?  


Knowing that the shutdown was intimately hurting buyers and sellers across the country, the Mortgage Bankers Association appealed directly to the Treasury department, which brought back 400 furloughed clerks to process these verifications, so it didn't cause massive problems nationwide.  Now, we all know the big banks are well taken care of by our government, they truly aren't going to hurt if Joe in Oklahoma's $200k loan doesn't go through, but Joe is sure going to feel some pain.  


The real estate industry as a whole feels its obligation is to do what they can to lobby for the American dream of homeownership.  There are some people who feel that this is a prime example of a special interest group overreaching or asking for special treatment; that it is everything that is wrong with the country when they make a special exception during a shutdown that is not limited to "protecting life or property."  But, it's also breaking constitutional law if the IRS gives out tax refunds this year before the shutdown is over.  While it may not seem like "protecting life or property," it kind of is if people are relying on those refunds to survive.  


However, what makes this situation unique, is that the department of the IRS that processes these transcripts is funded much differently than other branches of the IRS.  The IRS collects $2 for every income verification transcript, so there are funds to help keep this branch open independent of the other branches that are 100% government funded.


The government shutdown hurt so many folks who have no control over their jobs, paychecks, etc.; if any industry can use their power to help ease the pain of the American people the shutdown is effecting negatively, shouldn't they?  It's an interesting question to ponder, but for now, we know that whether you think lobbying is evil or not, the transactions are continuing to move along for the eager and stressed buyers and sellers out there.  


Feel free to check out "Mortgage Bankers Association appealed directly to Treasury for relief during shutdown" for more information

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The Skokan Team with RE/MAX Star Properties BRE: 01858517