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Hot Manhattan Housing Market Will Be Cooled By Closed IRS

Wednesday, October 02, 2013

The partial government shutdown will likely squeeze prospective homeowners’ ability to get home loans, just as demand for mortgages is surging.

The Internal Revenue Service has stopped providing proof-of-income documents for loan applicants. Guy Cecala, publisher of Inside Mortgage Finance, says that's a problem.

“When someone gets a mortgage they sign a document that says, I authorize you to get my tax returns from the IRS and the IRS has an expedited program where it tries to turn those around in a week. That program is not being staffed at all,” Cecala said.

Freelancers will likely be the most affected, because they have few options to prove their income through documentation.

Tightened lending should put a damper on the recent frenzy of home sales. The latest quarterly real estate numbers for Manhattan show 3,837 homes were sold over the last three months, according the firm Miller Samuel. It’s the second-highest level in 24 years of record-keeping. The firm's Jonathan Miller said many window-shoppers jumped into Manhattan's housing market over the summer, after mortgage rates rose sharply at the end of May.

Editors:

Julianne Welby

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