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Commentary: Banks, mortgage companies scrambled to cope with fallout from partial government shutdown

Christopher G. Cox

Commentary: Banks, mortgage companies scrambled to cope with fallout from partial government shutdown
February 07
10:33 2019

Virtually every business institution in the country, financial and otherwise, sought ways to deal with problems caused by the partial shutdown of the federal government.

Asked how his company handled the shutdown, Charlie Daniels, district manager for Residential Mortgage Services (RMS) in Pennsylvania, said, “You can’t be in the mortgage business any longer without being resourceful. As the shutdown approached, we took a look at all our lines of business and tried to determine how we would be impacted.”

Daniels noted that while FHA and VA mortgages remained largely unaffected, a mortgage program available through the U.S. Department of Agriculture (USDA) ground to a halt.  “The USDA program is primarily for first-time home buyers in rural areas,” he explains, “and offers mortgage loans for as little as no money down.  USDA was not accepting any conditional commitments during the shutdown, so we had a pipeline of those loans that were being held hostage.”

Another problem RMS encountered, Daniels says, was obtaining transcripts from the Internal Revenue Service (IRS) to verify that an applicant’s taxes were current and that returns had been filed.  “We looked at a couple of workarounds,” Daniels said. “In some cases we received assistance from state housing agencies, such as the Pennsylvania Housing Finance Agency, which was the first state agency to approach us.”

On the bright side, Daniels points out that despite the shutdown the Federal Emergency Management Agency (FEMA) continued to process applications for flood insurance in locations where mortgage lenders required that additional coverage because properties were in an area defined by flood maps.

“Loan processing, depending on the type of loan, was more difficult, but not impossible,” Daniels adds.

The approach to the shutdown taken by San Francisco-based Wells Fargo & Company, one of the nation’s largest financial institutions, was to offer relief to customers by waiving and reversing some fees normally associated with loans.

In a statement issued by the company, Wells Fargo said it, “… is assessing the individual needs of customers who are employed by the federal government and impacted by the shutdown, and working with them on a solution.  The company offers options on all types of loans to help these customers avoid the negative consequences of missing a payment, such as late fees, negative credit reporting, auto repossession and foreclosure.”

Wells Fargo has also donated $250,000 to United for the U.S. Coalition, an organization created by United Way Worldwide to support local communities.

Tim Sloan, Wells Fargo CEO and president, said his company “…hopes to lessen the impact on our affected customers while also providing individual assistance for their unique needs.”

Wells Fargo worked with customers, both federal government employees and others whose income was disrupted as a result of the shutdown by establishing a customer assistance line.  By calling 800-219-9739, customers could discuss their need for help and explore options for assistance.

Customers could also visit a Wells Fargo branch office or get information at the company’s government shutdown assistance page on its website – www.wellsfargo.com.

Christopher G. Cox is publisher and managing editor of realesavvy.com.

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