Private Insurers Step Up as FHA Shuts Down
Private mortgage insurers have been alerting clients and potential clients they will insure mortgage loans whose closing have been delayed or imperiled by the shutdown of the Federal Housing Administration.
“FHA will have limited staff during a shutdown,” according to a contingency plan prepared by the Department of Housing and Urban Development. “The longer the shutdown, the more serious the impact will be.”
The federal government entered its second week of shutdown on Monday.
CUNA Mutual Group Mortgage Insurance is preparing a document for its website which will alert client credit unions to how the firm will help them during the government shutdown, including relaxing requirements for verbal verification of employment in situations where a member's agency employer might be closed, according to CMGMI spokesman Joel Luebkeman.
This policy also extends to IRS verifications, Luebkeman said.
“We want to be clear that we are in full accord with what Fannie Mae has said about underwriting criteria in the case of furloughed government employees,” the spokesman said, adding that CMGMI still considers the shutdown a temporary or shorter-term interruption to government operations.
Other private mortgage insurers announced similar approaches with a few, such as United Guarantee, a mortgage insurance subsidiary of American International Group, announcing similar policies to CMGMI and pledging to turn applications around in 24 hours or less.