FEMA and IRS rescue shutdown victims

 Residential Mortgage  1 Response »
Jan 112019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

As the government shutdown lingers, let’s do a quick update on the effects it’s having on the mortgage world.

As I reported before, the mortgage products experiencing the greatest impact are those offered through the USDA. USDA will not issue commitments during the shutdown, meaning if you’re using a USDA loan, you’ll probably experience a delay.

But we have some positive developments. Under intense pressure, FEMA reversed its position on new flood insurance policies. The new guidance means insurers can sell new policies and renew existing ones during the shutdown. Given that the ban on new policies lasted only a few days and over Christmas, it’s unlikely it created any significant backlog. If the property you’re buying requires flood insurance, you shouldn’t experience any shutdown-related delay.

Note that despite the reversal, the National Flood Insurance Program still is living on life support – a temporary extension that expires in May.

Another positive announcement came from the IRS. As I reported before, lenders often verify an applicant’s income tax return with the IRS during the loan process. The IRS previously stated it would not process any verification requests during the shutdown. On Monday, however, the IRS announced it would resume processing requests. The IRS says it has a significant backlog, so if your loan requires an IRS verification, you still may experience a delay.

File tax return extension if closing mortgage soon

 Loan Guidelines, Residential Mortgage  Comments Off on File tax return extension if closing mortgage soon
Apr 012015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

If you’re planning to apply for a mortgage, your lender likely will ask you to sign an IRS form that allows it to order a transcript of your tax returns. This is despite the fact that you also provided copies of your returns. We love redundancy.

As we approach the tax filing deadline, you need to keep in mind that when you file your return, the IRS doesn’t make it available immediately. If you file electronically, your return generally will be available 2 to 3 weeks after filing. If you file on paper, you can expect to wait 6 to 8 weeks if you’re due a refund. You’ll wait until mid-to-late June if you have a balance due.

These times are important because once we pass Apr 15th, your lender will expect you to provide either a copy of your 2014 return or a copy of the request for extension. If you provide your return, you may not be able to close your mortgage until the lender receives the tax transcript from the IRS. Thus, if you file on the 15th, closing on the 30th is risky.

If you plan to close in the next couple months, the safest bet may be to file for the automatic extension even if you already have completed your taxes. That way you won’t have to worry about any backlogs at the IRS.