How does the government shutdown impact mortgage loans?
ESCAMBIA COUNTY, Fla. (WEAR) —
The local housing market is being impacted by the partial government shutdown. Several types of mortgages are government backed. Some are still okay to be processed, but others are not.
Federal Housing Administration (FHA) and Veterans Affairs (VA) loans are still good to go, but USDA rural loans are on hold until further notice. A USDA loan allows people to buy a home with 100 percent financing in areas that are considered rural.
For example, that includes some areas of Pace, Milton, and Beulah. Realtor Jason Panos said several of his clients are in a housing limbo until the government reopens.
He said,"It's really frustrating. Some of those clients have been under contract for a long time. At this point, they have not only given their notice, but also in the rental area. The landlords re-rent the property, and then the buyers don't have a place to live now and have to move into temporary housing and that can change their financial picture."
He feels even when the government reopens, the impact will still be felt for a while.
"The seller is waiting for the house to close and buyers are waiting for everything to happen. Even if they open tomorrow, we are not talking a few days. We are talking several weeks before they can review these,” he explained.
Mortgage lender Jennifer Moghadam, with Mortgage Trust, said many people have been concerned about how the shutdown will impact them.
She said, "We've had clients who are under contract and they are calling to make sure it won't affect their loan, and realtors as well. Fortunately, we are able to close VA, and FHA, conventional, and jumbo as well.”
She says about 10 percent of her clients are affected. She said, for some of them, she was able to switch them to another product. But for some, they simply must wait.
"We do have a wide range of products. The only one it would it really affect is if they didn't have money at all and really needed the 100 percent financing. We can still issue the pre-approval, but all parties would need to know about it and be patient about closing."
The National Association of Realtors has asked the Trump Administration to jump-start the USDA rural housing loan program. At this time, no decision has been made.
The other group impacted is federal employees. They are at a standstill and can't finance a home until they start getting paid again.