COSTA MESA (CBSLA.com) — The government shutdown could bring the Orange County real estate market to a standstill.
“We have to verify tax returns through the Internal Revenue Service for all loan transactions, and so we can’t do that right now with the government being shut down,” said mortgage broker, Lauren Stipe.
Stipe said buyers can’t get a loan without the 4506 forms.
“(I have clients) waiting and, basically, hoping that we’ll get the results back in time for them to close escrow on time,” she said.
Stipe is hopeful the shutdown will end soon. But if it doesn’t, she’s worried buyers will fall out of escrow and be forced to cancel their contracts.
“I think worst case scenario, if they remove loan contingencies, they have the potential of losing their deposit on the house,” she said.
KCAL9’s Stacey Butler reported that so far, there have been few disruptions. Most loans close at the end of the month and take 30 to 60 days.
Traditional loans aren’t the only ones affected.
Loans backed by agencies like the Federal Housing Administration could also be in jeopardy as the FHA’s diminished staff struggles to keep up with processing.
“I’m hoping that like previous situations, they’ll resolve it within a matter of days,” said Stipe.