THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, November 16, 1995 TAG: 9511160324
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Medium: 85 lines
Don't panic. You might still be able to move into that house you're buying.
It appears as though the partial federal government shutdown will inconvenience some seeking to purchase homes with Veterans Administration or Federal Housing Association backed loans. But most seeking VA or FHA mortgages should be able to close on time.
``I spent most of my morning fielding calls and clarifying some misunderstandings,'' said Jeff Aftanas with Norwest Mortgage Inc.in Virginia Beach.
An estimated 60 percent of the Hampton Roads real estate market uses FHA or VA loans, he said.
Those most likely to see delays are home buyers who want to apply now for the federally backed mortgages or those doing business with a smaller mortgage company, industry officials say.
For large mortgage lending institutions in Hampton Roads, it's business as usual. That's because they have been authorized by VA and FHA to underwrite and close loans themselves.
``The authority to insure hasn't stopped,'' said Brian Chappelle, staff vice president of government affairs at the Mortgage Bankers Association of America, a trade association for the mortgage banking industry. ``The ability of the government staff to work has been stopped.''
Chappelle's organization issued a statement saying that the shutdown ``does not mean that FHA's or VA's authority to insure loans has expired. . . . HUD and VA staff have advised us that any work normally done by lenders can continue to be done by lenders during the period when the government is shut down.''
Issuing VA- and FHA-backed mortgages could be delayed, mortgage industry officials say, if the partial government shutdown lasts for more than two to three weeks. It might take 120 days instead of the typical 30 to 60 days to process the loans, industry officials said.
``I think its impact is going to be negligible from a consumer point of view,'' Chappelle said. ``The only ones that will be hurt by this are those people who want to get a VA loan today and wanted to close in the next two to three weeks. It would not be possible. That's the most adversely affected borrowers.''
``It's going to temporarily affect any new business,'' Aftanas added. ``It's a temporary situation. It's not catastrophic.''
Small mortgage banking firms that don't have the delegated authority to underwrite or close FHA or VA loans, like First Home Mortgage, will be hurt by the furlough of federal employees.
Some smaller lenders have decided not to process loans, like First Home Mortgage.
People who are trying to buy property directly owned by the Department of Housing and Urban Development also might experience problems because they need to deal with government employees from that agency directly.
Chappelle also suggested that the home building industry might feel some effects: ``It could delay new construction, because there's more government involvement in new construction.''
Louis L. Tourgee III, division vice president of CTX Mortgage, a division of Centex Corp., estimated that less than 5 percent of the mortgage business in Hampton Roads would be affected by the government shutdown.
``In excess of 95 percent are underwritten or closed by independent lenders,'' Tourgee said of FHA and VA loans. ``The only thing to impact our day-to-day operations is our ability to get government case numbers on these files. And we were able to get case assignments through the computer system because it's automated.'' by CNB