|Home Financing During the Shutdown
By Don Menendez, Paramount Mortgage Production Manager
The government shutdown is here. Whether it’s not being able to get a new Social Security card or visit a national park, Americans will immediately feel the effects. But there is one bright spot of the economy that stands to be affected as well: housing.
How the shutdown will affect housing has revolved around the mortgage market, specifically prospective buyers’ access to new home loans. After all, more than 90% of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.
Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What possibly will change is how long the process takes, as many agencies expect to experience delays.
Fannie Mae and Freddie Mac purchased mortgages will be unaffected because their operations are paid for by fees charged to lenders. The Department of Veterans Affairs will continue to guarantee mortgages for Americans who have served in the military, since these loans are funded by user fees as well. The FHA office remains open for business, albeit with a smaller staff. For lenders who rely on FHA underwriters to approve loans, this will cause delays. Ruth Battle, Senior Vice President at Paramount Mortgagesaid, “Paramount Mortgage has a staff of underwriters on site and we expect absolutely no delays in taking care of our clients’ needs.”
USDA loans…well that is another matter. The USDA says that NO NEW housing loans or guarantees will be issued through its Rural Development programs in a shutdown.
The consensus is that for the most part you aren’t going to see much of a hit in the mortgage market unless it goes for a long period of time. If the shutdown does stretch on, the worry will be what mortgage rates do in a market shrouded in fiscal uncertainty and how that will affect the home buying, especially in light of recent rate spikes. For now, at Paramount Mortgage, it is business as usual.