Gov’t Shut-Down Will Affect Loans . . .What That Means For YOU

A government shutdown has far-reaching consequences for some, but minimal impact on others. 

For many low-to-moderate income borrowers and first-time home-buyers seeking government-backed mortgages they could face serious delays during the shutdown. The Federal Housing Administration, which guarantees about 30 percent of home mortgages, will not underwrite or approve any new loans during the shutdown. Actions on government-backed loans to small businesses are suspended as a byproduct of the shut-down. 

So what happens in the meantime?

Home buyers who have applied for an FHA-insured mortgage could see the escrow process come to a stand still, due to a government shutdown. The Federal Housing Administration, in an effort to create a contingency plan, warned that the hiatus in appropriations for HUD’s 8,709 employees across the country will put any endorsement of single family loans in abeyance.

Most of the HUD workers will be required to stop working, due to the lapse in appropriations, and that’ll shut down most housing agency functions, the notice says. As a result, staff won’t be available to underwrite or approve new single-family loans.

How does this affect your transactions?

Here’s a look at the memo that the U.S. Department of Housing and Urban Development put out:  HUD Contingency Plan  

www.hud.gov/‎