How a government shutdown impacts real estate and housing
January 22nd, 2018|
Loan approvals and mortgages could be delayed, but experts think the housing market would bounce back.
With a dispute in the Senate over the immigration program DACA still unresolved, the government shutdown continues for a third day on Monday morning after Congress’s failed attempts to pass a spending deal that would fund the government through mid-February.
A Senate vote on an agreement that would end the shutdown and fund the government for another three weeks is scheduled for noon ET Monday. Whether the plan will gain enough support from Democrats is unclear, according to CNN, but until business as usual resumes, homebuyers and sellers could be in store for headaches — but not any long-term setbacks.
During a shutdown, the Internal Revenue Service (IRS), Social Security Administration and the Department of Housing and Urban Development (HUD) furlough large swaths of workers, significantly delaying mortgage approval until work resumes.
Banks and private lenders will operate as usual, housing experts told Inman News. But the mortgage applications they approve or deny include tax records and financials requiring certification. Fannie Mae and Freddie Mac, despite being government-sponsored enterprises, are not government agencies — and therefore are not affected.
At HUD, which oversees the Fair Housing Act, nearly all of the agency’s approximately 8,500 employees are prohibited from working during a shutdown, which puts a halt to all “meetings, visits and appearances” by HUD employees. Borrowers who apply for loans through the Federal Housing Administration (part of HUD) or the Department of Veterans Affairs will face delays.
National Association of Realtors President Elizabeth Mendenhall emphasized that a long-term shutdown could pose larger problems for the housing market and called on senators to vote in favor of a budget extension Friday.
On Thursday, House Republicans voted to extend a budget deadline past Friday, but without concessions on immigration, including permanent protection for so-called Dreamers in the federal DACA program, 45 Senate Democrats and five Senate Republicans voted against the measure, triggering the shutdown.