What The Shutdown Means For The Housing Market

Since Tuesday morning, many government services were shut down or cut back. Congress is battling back and forth trying to resolve their issues. This is the first government shutdown in 17 years. "Essential employees" are still allowed to work but as many as 800,000 "non-essentials" are not allowed in government buildings and they don't know when they'll be paid again.

As you may know, the central issue being debated is Obamacare.  According to House Speaker John Boehner (R-OH), "The House has voted to keep the government open, but we also want basic fairness for all Americans under Obamacare."

While 800,000+ employees are on the sidelines, the members of Congress are still working and because of the 27th Amendment, all 533 of them are still being paid.

President Barack Obama has said "the idea of putting the American people's hard-earned progress at risk is the height of irresponsibility, and it doesn't have to happen. Let me repeat this. It does not have to happen."

Congress and the President continue to disagree and have yet to reach a resolution. What does this mean for the housing industry? According to the president of NAMB- The Association of Mortgage Professionals, Don Frommeyer, "the shutdown isn't going to help the U.S. economy continue to grow and interest rates across the board could very well increase, depending on what the bond market does during this time."

As of September 27th, The U.S. Department of Housing & Urban Development (HUD) has indicated that the FHA will continue to endorse single-family loans during the shutdown. Of their 8,709 staff members, only 349 of them are "essential" and continue to work. However, an even more limited number of FHA staff is allowed to do their underwriting and approve new loans. So right now, anyone in the process of purchasing a home may see delays since the shutdown will cause these processes to take much longer than usual.

Those facing foreclosure right now will still have loss mitigations continue but the FHA will not approve any lender applications right now.

If you have any questions about how the shutdown could be affecting your mortgage process, feel free to call your loan officer or give us a call at 888-883-5252 and we will try our best to answer your questions!

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