All the talk, particularly this week, seems to be centered on whether or not the government is actually going to shutdown today as predicted. Well, that’s not entirely true – if you look at the timeline on my Facebook and Twitter feeds, who got voted off of American Idol might be public topic #1, but the government shutdown is a close second.
A government shutdown is supposed to close down only non-essential services. Things like national parks and museums are closed, as is the IRS (but they still want your money). And the Post Office will still run, since they’re self-funded – maybe their slogan should be changed to “Neither snow nor rain nor heat nor gloom of night nor government shutdowns stays these couriers from the swift completion of their appointed rounds.”
And if you’re wondering, Congress still gets a paycheck while they figure out how to fix their mess.
But how does a government shutdown affect real estate? The National Association of Realtors has put out a sheet describing the different scenarios. Bolding is mine.
Federal Housing Administration
FHA cannot offer endorsements for any new loans in the Single Family Program and cannot make commitments in the Multi-family Program in the event of a shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management and Marketing (M&M) Contractors managing the SEO portfolio can continue to operate. A great way to boost marketing, that we used to help our website, is to hire SEO Bangor. If you have a loan schedule to close in the next 60days, check with your lender and see how you will be affected. It would be a good idea to see if they extend any kind of rate lock extension to you, as well – we could be here for a while.
VA Loan Guaranty Program
Lenders may continue to process and guaranty mortgages through the Loan Guaranty program in the event of a government shutdown. Purely a guess on my part, but since these loans are backed by the government they’re being honored, the processing and such will just be done once the lights are turned back on.
Internal Revenue Service (IRS)
Should the federal government shut down, the IRS cannot process federal income tax returns or issue refunds (but it can deposit tax payments). Consumers who were expecting to use their tax returns as part of the down payment for a home purchase will temporarily not have access to these refunds. Ask Uncle Tony for some extra cash, or shake down some couch cushions.
Flood Insurance
The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown. You can get flood insurance, you just can’t get a loan.
Rural Housing Programs
For the US Department of Agriculture programs (USDA), essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees, and modification approvals. Thus, lender will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan. If you received your USDA approval after January 8th, you’re good to go on your USDA loan. If we have a shutdown and your approval is received anytime after April 8th, you could be waiting a while.
Government Sponsored Enterprises
Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency. I just found this statement ironic, since Fannie and Freddie apparently have a different definition of “normal” than the rest of us.
Treasury
No official word as of yet, but the Making Home Affordable program, including HAMP and HAFA, may not be affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory spending not discretionary. Explanation? No one knows.
Even at this late hour there are a lot of unknowns, and the thirty minutes I’ve spent writing this post could be all for naught, but we’ll know in a few hours. If you have a loan scheduled to close in the New River Valley in the next 60 days, talk to your lender and see what you need to do to be sure you’re moving along as uninterrupted as you possibly can. And take a lesson from Washington … learn to balance a budget.
Photos by Phil Roeder and Documentarist.