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What to Do If the Government Shutdown Affected Your Mortgage

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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The most recent government shutdown was the longest in U.S. history, lasting 35 days before coming to an end in late January. While all housing-related government agencies are back up and running, the delay created unprecedented challenges for both the mortgage industry and homeowners who didn’t receive a paycheck for more than a month.

For now, there is a 21-day window for business as usual. But on Feb. 15, if political parties don’t come to a meeting of the minds, there is a risk of another shutdown. If you encountered hardships that prevented you from making your mortgage payment or receiving a paycheck, there are a number of things you should do immediately.

It’s also important to know what to expect if another shutdown happens, as well as the effects the most recent one could have on interest rates going forward.

What to do if you couldn’t make your payment

If you were unable to make a payment during the shutdown because you weren’t paid, you could request a forbearance. A forbearance is a delay in your payment due to an unforeseen circumstance. With forbearance, your monthly payment is reduced or eliminated for a period of time. When that’s over, you can generally either make a lump sum payment to bring your mortgage current or spread the additional amount over future payments.

You will need to provide proof that your forbearance request is due to lack of income during the shutdown, such as some kind of written notice from your employer. Fannie Mae’s servicing guidelines allow for up to a 12-month forbearance approval.

Credit bureaus can’t tell which workers were furloughed, or if a late payment was the result of a government shutdown. They simply wait for payment information from lenders, which is why you should contact your mortgage servicer immediately if you anticipate having any problems making payments.

Tips for your mortgage if there’s another shutdown

Keep your mortgage servicer’s name, your loan number and a current mortgage statement handy if another shutdown occurs and you fear you will be unable to make a payment. The sooner you notify your mortgage company about a sudden suspension of income, the better.

As indicated above, they can offer you a forbearance, but that may not prevent credit bureaus from reporting a late payment, potentially dropping your score. If you can document the late payment was due to hardship during another government shutdown, you may still be able to get approved for financing, or dispute a late payment with the credit bureaus so they can note the reason for the late payment on your credit report.

What to do if you had a full month gap in income

If you’re applying for a mortgage or will be soon, you’ll need to show steady income. When lenders analyze your income, they will calculate your year-to-date income as a way to gauge your average earnings. If you weren’t paid for a full month, your income for the year might look unusually low — potentially putting your mortgage application at risk.

Again, the key in this situation is to let your lender know that you were furloughed for the entire shutdown without pay. Any letters or documentation you can get from your human resources department confirming this in writing will be even stronger support. This will help your lender justify approving the loan even with lower average income.

Tips if there’s another shutdown and you are a government employee

If you’re applying for a mortgage and worried that a government shutdown could throw the process into disarray, there are a few steps you can take now.

Lenders generally require the most recent 30 days of income information to preapprove you for a mortgage. If you are a government worker, don’t discard your pay stubs.  If you don’t get a physical pay stub, be sure to print one out from your employer’s payroll website to cover your bases.

At the very least, lenders need to be able to contact someone to verify that you are in fact still employed. Find out from your employer if there is a person in your payroll or human resources department who will be available even during a shutdown, and have the contact information handy for your lender.

Disclosure: This post contains links to LendingTree, MagnifyMoney’s parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Denny Ceizyk
Denny Ceizyk |

Denny Ceizyk is a writer at MagnifyMoney. You can email Denny here

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What to Do If You Think Your Mortgage Data Was Breached

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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This week, the online technology publication TechCrunch reported that millions of pages of mortgage loan documents were leaked online. More than a decade’s worth of data may have been affected, giving identity thieves access to financially sensitive documentation about every aspect of a consumer’s income, credit and assets.

The incident makes clear one potential downside of the industry’s inexorable move online. Mortgage companies have been scrambling to keep up with consumer demand for a fully digital mortgage experience. The convenience of allowing lenders access to bank records, employment and income history, and credit information electronically may save time and stress in the mortgage approval process.

However, one of the downsides to all of this digital simplicity is the risk a cybersecurity breach could give a hacker access to all of your financial data in one place.

Knowing what to do and what not to do are essential in preventing identity thieves from using any of your personal information to obtain new credit. You also need to know how to spot scammers that will try to take advantage of consumer fear and confusion to promote bogus services.

The first thing to do if your data was compromised

Beware of incoming phone calls

Do not provide any sensitive information over the phone to anyone who calls regarding your credit card or loan accounts, or anything having to do with your bank. Insist on getting a call back number and call them back — if they aren’t for real, they will probably hang up as soon as you ask for their contact information.

The FTC suggests you “don’t believe your caller ID.” Sophisticated scammers can create a “spoof” phone number that shows up on your caller ID in the name of your bank or credit card company, but is really a con artist trying to take advantage of you.

Do not open emails or answer texts from anyone claiming to be related to the recent data breach. If you receive such electronic communication, contact the creditor or bank immediately and ask for their security department to confirm if the correspondence is legitimate.

The IRS will not call you to confirm your personal information. The IRS recommends that companies experiencing a data breach send you a letter explaining what happened, what you can do to safeguard your credit and identity and how to follow up with them.

Any conversations that you have with creditors or banks should be initiated by you, using contact information you have on credit card and bank statements that you already have on file.

How to protect your accounts

Change your passwords on any account that has online access

There is information suggesting the most recent mortgage data breach may have included public access to passwords and user IDs for a variety of different financial accounts. Change your user ID and passwords to your online bank accounts and any credit accounts that you access online.

Track your bank and credit card balances, and notify your bank or credit card company immediately if you see any unusual charges or withdrawals.

Subscribe to a credit monitoring service

Your bank or an online credit monitoring service will provide up-to-date information about any new inquiries made. If you see unusual activity, then you may want to follow one of the steps below to activate a credit freeze with all of the credit bureaus so no new credit can be opened without direct contact with you.

What to do if you see signs of identity theft

If you have evidence that new credit accounts are being opened, or if someone has accessed your bank account, there are several steps you need to take to notify authorities and fraud departments at your bank and creditors.

Call your bank first, brokerage accounts second

You need to make sure that your assets are not liquidated, so contact your bank immediately. Most banks have fraud protection measures in place to replace any stolen money quickly. The sooner you contact the bank, preferably in person, the quicker a report can be filed, your old account can be closed and a new one is opened.

Brokerage accounts don’t have the same identity-theft protections that bank accounts do. If you have mutual funds, IRAs or 401ks, you should contact the brokerage. If you do see any suspicious activity, you’ll also want to contact the Securities and Exchange Commission.

Contact your creditors next

Credit card companies have fraud and identity-theft departments. This information is often on the back of your credit cards so contact them immediately to let them know your information has been used without your authorization. They may need you to fill out police reports, and provide additional follow-up as the fraud department investigates your claim.

Make sure you contact the IRS

It may not be top of mind, but come tax time, you may get an unpleasant surprise if you learn someone filed a tax return on your behalf. This happened during the 2017 Equifax breach — because returns are filed electronically now, it’s much easier for an identity thief to try to get a tax refund using your identification information.

Consider putting a fraud alert on your credit

The Federal Trade Commission recommends putting a credit freeze on your credit if you suspect or are in the process of an investigation into identity theft of your personal information. You will need to validate any new credit requests that you make and some lenders, especially mortgage companies, will need you to release the freeze if you try to apply for a home loan in the future.

If you haven’t actually experienced any fraud but have been notified by a company that you did business with that they experienced a breach of data, then you might want to start with a fraud alert. Unlike a credit freeze, a fraud alert allows your credit information to be accessed, but it lets any creditors know that you suspect or are concerned that your information may have been compromised.

Put everything in writing

You’ll want to have a date-stamped written record of all communications, in case you up needing to take legal action to recover your losses. Police and federal investigators may need this correspondence to pursue investigations against identity-theft criminals.

The FTC also has an identity-theft affidavit that can be completed and provided to law enforcement.

Watch out for signs of breach scams

Impostor scammers

Impostor scammers will try to play on fear and confusion by creating schemes to defraud you out of money for extra security services or even lawsuits representing your interests and promising large payouts if you’ll just join their list. They may call, email, send letters or even knock on your door claiming to be law enforcement or an agent of a federal agency.

If anyone tries to charge you an upfront fee of any kind to protect you from further breaches, or to include you in any kind of legal action, hang up the phone and contact the authorities. Given the size of this mortgage breach, you’ll want to sign up for the Federal Trade Commission’s scam alert service to find out if there is a pattern of new scams related to this leak.

Bogus mortgage servicing transfer letters or phone calls

Because data was accessed from companies that service mortgage loans, hackers may send you notices of a transfer of servicing and tell you to make your payments to a new mortgage company or location. Use your recent mortgage statement to contact your current mortgage company if you get any notices.

Also, be sure to file a complaint and provide a copy of the email or mail correspondence to the authorities if they request it.

Be prepared to monitor your credit and assets frequently

The FTC provides excellent resources regarding what to do if you are a victim of identity theft.

Identity thieves may wait a while to use your data. The info you provided to get your mortgage provides a great deal of detail about your financial profile, which means a scammer can impersonate you for many types of online credit and financial transactions.

By giving notice to your creditors, banks and the IRS, they will at least be on notice to watch for activity. Their correspondence should be in writing and provide you with verifiable contact numbers for any information requests.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Denny Ceizyk
Denny Ceizyk |

Denny Ceizyk is a writer at MagnifyMoney. You can email Denny here

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Mortgage

What Happens to My Mortgage If There’s a Government Shutdown?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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In the history of the U.S., the government has only shut down 21 times. That makes it a pretty uncommon occurrence — except that three of them occurred in 2018. Unless you’re a federal worker, you’re not likely to be drastically affected by the shutdown.

However, certain government agencies are involved in the mortgage process, so your home loan may be delayed depending on your mortgage type and how far along you are in the process. It’s a good idea to know what will be affected, and what you need to do in case the shutdown lasts for several weeks.

The most important thing to do is contact your lender, whether you are at the beginning of the loan process or at the end, and find out the systems and policies your lender has in effect to handle the processing of your loan during a government shutdown.

What a government shutdown means for different mortgage types

After two government shutdowns in the last two years, mortgage agencies like the Federal Housing Administration, Fannie Mae, Freddie Mac, Veterans Affairs and U.S. Department of Agriculture have come up with shutdown operation plans to keep lenders informed of what systems and loan programs will still be functional, and which ones will be delayed or halted.

Keep in mind that lenders may still be able to fund your loan even if the guidelines below indicate the program will not be operational. It will depend on the lender, so be sure to give your loan officer a call to find out if a shutdown will have any effect on your loan process.

How FHA loans are affected by a government shutdown

For the most part, FHA loans will continue to be processed as usual. Because staffing will be limited, there could longer-than-usual delays, but ultimately the transactions should close. This includes loans in process for purchases and refinances.

The only programs that could experience bigger roadblocks are Title I loans and the FHA’s Home Equity Conversion Mortgage (HECM) program — better known as reverse mortgages. The Title 1 program is a renovation loan for low-income borrowers that need work done to a home, while the HECM program is a specialized reverse mortgage loan for homeowners 62 and older to receive cash from the equity in their home.

If you have questions that require you to contact someone at a local Housing and Urban Development office regarding an FHA loan, chances are you’ll get their voicemail. You should be able to get any questions you have answered by your lender if your loan is already in process.

How conventional loans are affected by a government shutdown

Fannie Mae and Freddie Mac are government-sponsored enterprises, but they don’t rely on government appropriations to continue operation. You shouldn’t have any interruptions in the loan process, with a few exceptions listed below.

Employment verification

Fannie Mae and Freddie Mac require verification of your employment at least 10 days prior your closing. Many government employers employ third-party service providers to verify employment status.

That means the information is automatically accessible through a database, so even if human resource personnel is not working because of another shutdown, employment may still be verifiable.

IRS transcripts

The IRS transcript form is used to verify the information from your W-2 or tax returns filed with the IRS. Fannie Mae and Freddie Mac only require that you sign one prior to closing, but before your loan is set up for your first payment, lenders are required to actually access the transcripts.

Ask your loan officer if they will pull the transcripts at the beginning of your process, or right before closing. Ideally, the transcripts will be completed early in the loan process, so you don’t encounter any delays due to a shutdown interrupting normal operations of the IRS.

Social Security verification

In some cases, lenders may need to validate your Social Security number. You will sign a form SSA-89 at the time of application, and if there are any discrepancies in your Social Security number due to errors on your credit report or conflicting documentation, the form may need to be run through the Social Security Administration’s records database.

Lenders have discretion to fund your loan without the form, but in some cases, if there is a significant issue with fraud or identity theft, this may be something that could delay your loan.

Flood insurance

If the property you are purchasing is in a flood plain, you will need to provide proof of adequate flood insurance. The Federal Emergency Management Agency closed briefly during the last shutdown, so again, the key is to get your flood insurance in place as soon in the process as possible if you know your property requires it.

Lenders may have exceptions for providing the proof after your closing, but again, it will depend on their policies.

How VA loans are affected by a government shutdown

The Department of Veterans Affairs offers competitive benefits for active duty and retired military service members, allowing for no down payment and easier qualifying guidelines than conventional and FHA loans.

The VA is fully funded for the fiscal year 2019, so additional government shutdowns should not have any effect on VA home loans in process. VA lenders may still need to verify the same information as conventional lenders, such as employment before closing and IRS transcripts, but again, this will vary by lender.

How USDA loans are affected by a government shutdown

The U.S. Department of Agriculture offers a 0% down mortgage program for buyers within certain income limits in rural areas. Unfortunately, many of the operations of the USDA loan program may be suspended during a shutdown.

If you are a government employee and have a current USDA loan, you should still be able to contact your servicer if you suffer hardship due to lack of income during another government shutdown.

What if I am a government employee that has been furloughed by the shutdown?

Don’t panic: Lenders in most cases are able to verify your income with your government-issued pay stubs and W-2s, as well as obtain some sort of written verification through a number of online databases that exist for employment verification by large employers like the government.

If you’re not sure, call your lender and ask them if there is anything special they will need to do to verify your employment before you close.

What to do if your closing or loan process is delayed by a shutdown

  • Make sure your real estate agent and loan officer talk to the seller and seller’s agent: Communication is key to keeping a government shutdown from creating too much stress on your home loan closing. Most sellers should understand this is beyond your control, and as long as they are kept in the loop, they should be OK with giving you more time to close. It’s not likely they will want to cancel the contract, re-market the property and start the entire process over with a new buyer for an event that historically takes a matter of days to resolve.
  • Keep track of your rate lock expiration: Your loan officer should be doing this, but you need to be aware of the lock expiration whether you are buying or refinancing because extending the lock could cost money. Be sure to ask your lender how they will be handling the cost of any potential lock extension.

Communication is key during shutdown-related mortgage delays

The mortgage industry continues to adapt to the increasing frequency of government shutdown.  Although there is nothing you can do to control whether or not another shutdown will occur, communicating with your lender or your current mortgage servicer will be the key to knowing what to do with the mortgage you currently have or the one you have in process for approval.

This post contains links to LendingTree, MagnifyMoney’s parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Denny Ceizyk
Denny Ceizyk |

Denny Ceizyk is a writer at MagnifyMoney. You can email Denny here

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Compare Mortgage Loan Offers for Free

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