What Does The Government Shutdown Mean For Real Estate?

With the shutdown, some federal housing and mortgage programs have been suspended or slowed until funding is restored. At this point, the effects are minimal for the majority of real estate deals, but some types of transactions will be significantly impacted. Here's a quick rundown: Mortgage Rates - With the shutdown and declining consumer confidence, mortgage rates fell to their lowest levels in 4 months. The average 30-year rate was 4.22 according to Freddie Mac. Federal Housing Administration - FHA will continue to endorse new single-family home loans as part of its loan guarantee program, but it will not make new commitments for multi-family properties. Expect delays in FHA loan processing, which usually runs around 45 days. Veterans Administration - VA will continue its loan guarantee program, but like FHA, expect delays in VA mortgage processing. Department of Agriculture Rural Housing Loans - Lenders and buyers must wait until funding is restored before USDA rural development loans will be approved. You may not think Tallahassee qualifies, but there are several areas on the outskirts of town, including Killearn Lakes where these loans are used. Government Sponsored Enterprises Big Bad Freddie Mac and Fannie Mae, who currently buy the vast majority of mortgages originated by banks, are not affected since they do not operate on funds appropriated by Congress. Department of Treasury - Homeowner assistance programs such as Homes Affordable Modification Program (HAMP) and Homes Affordable Refinance Program (HARP) are not affected since they are funded through mandatory spending not discretionary spending. Internal Revenue Service - Most lenders require an IRS Form 4506T Request for Tax Transcript in order to process a loan application, short sale request, or loan modification. Since the IRS has stopped processing all forms, expect delays in processing these requests. Many lenders are adopting flexible policies to allow mortgage closings followed by income verification when the service becomes available again. Federal Emergency Management Agency - The National Flood Insurance Program is not affected because it's funding comes from premiums. However, those required to carry flood insurance should be aware of the significant changes taking place to coverages and premiums this month. Check with us if you would like more info 850-445-2476.