As we enter week #2 of the government shutdown, we took a hard look at how it would affect the mortgage market. Here’s what we found:

* If the shutdown lasts only another week or so, the impact will be minimal.
* Fannie and Freddie aren’t affected.
* FHA is continuing to process loans, but with a much much smaller staff. According to a recent WSJ article, HUD, of which the FHA is a part, is working with only 64 of its 2,972 employees.
* The biggest hassle for those buying homes or looking for a loan modification right now? The IRS is shut down, which means they aren’t issuing Form 4506-T. So what, you ask? This form is what mortgage lenders use to verify borrower income. Lenders are being forced to decide whether or not to close loans or give loan modifications without this form. In this age of increased scrutiny, it’s a tougher question than you might think.

What concerns us most, however, is the 800,000 government employees who have been essentially laid off without pay. Keeping their financial house in order becomes more difficult without a paycheck. MK’s resources are here to help, offering local help in 20+ categories to those in need. Those affected should contact their mortgage lender, or see their website for the MortgageKeeper icon.