Tuesday, November 12, 2013

Government Shutdown Impacts on Housing

Some of you may not know that I was working for the federal government during the last shutdown.  After serving as Deputy Assistant Secretary for Policy under HUD Secretary Cisneros, I moved over to run the Administration's rural housing and community development loan programs as head of “Farmer's Home,” managing 5,000 staff, 1,700 local offices and a $4 billion loan portfolio for single- and multi-family housing and community development loans.  We cut the agency's appropriation by about 40% by centralizing loan servicing, closing many offices, and shifting from a 1% loan for all eligible homebuyers to a sliding scale loan ratea shift long overdue.  Our entire staff--from top to bottom--was on hiatus for those weeks.  I could not get into the building.

These days, nearly all loans (and re-fis) require some government involvement before closing.  Buyers assert net income based on tax returns, but the lender has to check with the IRS, which is on hiatus, for accuracy before closing a loan.  So for now, most loans that Fannie Mae or Freddie Mac will buy are on hold, any FHA (low downpayment) loan is on hold, and many jumbo loans are on hold.  And all those home sales are correspondingly on hold, along with any other sales which depend on these sales closing.  Home sales are abstract when they don't involve you, but know that some of your friends and neighbors are really feeling the pinch during this shutdown.  When the IRS gets back in business, they'll have a backlog; we'll need to be prepared for some delays then as well.

No comments:

Post a Comment