The government shutdown lingers, and hundreds of thousands of workers are furloughed.  If you are one of these furloughed workers, the effects of the shutdown are pretty clear.   But many others are feeling the effects as the shutdown continues.

Home loans are now being delayed.  Borrowers who have applied for loans through FHA, VA and the Department of Agriculture have been impacted because of the drastically reduced staffing at these agencies.   

Businesses are being impacted because the Small Business Administration cannot continue processing loan applications until government operations resume.

Even loans that are not backed by government agencies are being effected.  “We are basically okay, with the exception of one deceptively trivial hurdle, the processing of Form 4506T IRS verification forms” says Gloria Shulman, founder of Centek Capital Group.  “Whenever we submit a loan to one of our sources, borrowers are required to sign a 4506T form, which essentially permits the lender to verify the accuracy of tax return information disclosed by the borrower in the loan application. The department within the IRS responsible for providing 4506T verification is currently non-operational, which means that approval, funding, and escrow closing are sequentially being delayed”  

The IRS is operating with less than 10% of their usual personnel during the government shutdown.  IRS audits are being suspended, walk in offices are closed, telephone support lines are not being manned.  Tax practitioners are deep into the busy October 15 filing season, and are unable to access IRS support for their clients.

The limited operations at the IRS could become more extreme since their shutdown plan only addresses a shutdown lasting 1-5 business days.  If the shutdown extends beyond 5 business days, the agency will reassess necessary activities and personnel, which could mean even further cuts.

Mail delivery will continue.  Air traffic controllers remain on the job.  Recipients of Social Security will continue to be paid.  The military will continue to be paid, though without special duty incentive pay.

There is little argument that the longer the shutdown continues, the more it will hurt.  The ripple effects will reach deeper and deeper with each passing day.