At midnight on September 30, Congress failed to approve funding for government operations, triggering a partial government shutdown. While not every federal program is affected, several housing and mortgage-related programs are being suspended or slowed. Here’s a summary of how key agencies and programs may impact your business and clients during this period.
Environmental Protection Agency (EPA)
Most EPA employees are furloughed. This affects regulatory programs like wetlands determinations under the 404 program and enforcement of lead-based paint disclosure and renovation, repair, and painting rules.
NAR Staff Contact: Russell Riggs –
U.S. Department of Housing and Urban Development (HUD)
HUD’s contingency plan allows some housing programs to continue, though many are reduced:
- FHA Loans: New single-family mortgage endorsements continue, but certain types (HECMs, Title I) are suspended.
- Operations: FHA claims, servicing, loss mitigation, and management of HUD homes will continue, primarily via contractors.
- Flood Insurance: Borrowers may turn to private flood insurance if the National Flood Insurance Program lapses.
- Housing Counseling: Agencies with previously awarded grants may continue services. New grants and payments are paused.
- Housing Choice Vouchers: Assistance payments continue, but extended shutdowns may create cash flow issues for PHAs.
NAR Staff Contacts: Elayne Weiss –
Government-Sponsored Enterprises (Fannie Mae & Freddie Mac)
Operations continue normally since they don’t rely on appropriated funds. Key considerations include:
- Employment Verification: Can be completed after closing but before loan delivery.
- Tax Transcripts: IRS may not process requests during the shutdown.
- Social Security Verification: May delay delivery if numbers aren’t confirmed.
- Flood Insurance: Applications or proof of coverage remain required.
NAR Staff Contacts: Ken Fears –
Internal Revenue Service (IRS)
Past shutdowns show IRS staff is limited to essential duties only. Services like tax return transcripts, lien releases, and taxpayer assistance calls are typically suspended.
NAR Staff Contact: Evan Liddiard –
National Flood Insurance Program (NFIP)
- No new or renewal NFIP policies will be issued during a lapse.
- Existing policies remain valid until expiration.
- Claims will be paid until funds run out.
- Private flood insurance remains an option.
NAR Staff Contact: Austin Perez –
U.S. Department of Agriculture (Rural Housing Programs)
- No new direct or guaranteed loans issued.
- Conditional commitments may be reviewed, but closings without a prior guarantee are at lender’s risk.
- Rental assistance continues only under limited conditions.
NAR Staff Contacts: Elayne Weiss –
Veterans Affairs (VA)
VA continues to guarantee home loans. However, staff reductions may cause delays in appraisals, eligibility requests, and loan processing.
NAR Staff Contacts: Elayne Weiss –
Small Business Administration (SBA)
- New loan processing halts, including the CDC 504 and 7(a) programs.
- Disaster loans continue.
- Routine servicing and liquidation activities are limited.
NAR Staff Contact: Erin Stackley –
Visa Programs (EB-5 & H-2B)
- EB-5 Investor Program: Continues to operate but with possible delays due to interagency slowdowns.
- H-2B Visa Processing: Stops during the shutdown. DOL’s Office of Foreign Labor Certification systems go offline.
NAR Staff Contact: Russell Riggs –
REALTOR® Business Impact
In a previous NAR survey, 75% of members reported no impact on contract signings or closings during past shutdowns. However:
- 11% saw impacts on current clients.
- 11% saw impacts on potential clients.
- The most common issue: buyers delaying or canceling due to economic uncertainty.
- USDA loans were cited as a source of closing delays.
Final Takeaway
While many essential housing operations continue, REALTORS® should prepare clients for potential delays in loan processing, insurance coverage, and program approvals. Stay connected with lenders, PHAs, and local officials for the latest updates, and use private market alternatives where possible.
