A government shutdown doesn’t stop the mortgage industry, but it does slow things down. Here’s how:

1. IRS Transcript Delays Lenders often require IRS tax transcripts (4506-C). If the IRS is closed, those transcripts can’t be processed, delaying loan approvals.
2. Verification of Employment (VOE) For government employees, lenders may struggle to verify employment and income if HR departments are closed or minimally staffed.
3. FHA, VA, USDA Loans These rely on federal agencies to issue commitments, guarantees, or insurance. During a shutdown, those pipelines slow dramatically, creating backlogs.
4. Consumer Confidence & Markets Bond markets can become volatile during a shutdown, and since mortgage rates are tied to Treasuries, rates may swing unexpectedly.
5. Closings Conventional loans with strong documentation often move forward, but anything dependent on government checks, transcripts, or approvals risks delays.

Bottom line: Loans will still close, but borrowers should expect extra time, especially with government-backed programs. Clear communication between lenders, agents, and clients becomes critical during these periods.

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