How Does A Government Shut Down Effect Housing?

A government shut-down can very easily delay housing sales and closings if the deal is being financed through a government backed entity.

Speaking with our local loan officer’s this morning, I was warned that if I had any clients who were planning to use an FHA loan-they will be delayed unless they were already assigned an FHA case number. Those without FHA case numbers before the shutdown-their deal will be stuck in limbo.  For those not in the business, FHA assigns every loan done through them a case number after the buyer gets a contract on a home.  This case number is used to track files and to record and order appraisals through FHA’s system.  If a loan doesn’t have an FHA case number, there is only so far that the bank can take the file before they just have to stop and wait for FHA.  With the government shut down, there is a good chance that FHA will be deemed non-essential, and therefore there will be no-one there to process requests for case numbers, causing banks to have to wait until the government gets back to business before they can proceed with any new FHA loans.

The good news is that once the case number is assigned the bank can keep sending info to FHA using the case number whether there is anyone there to record it immediately or not.  If your loan is in process now, you have nothing to worry about!

If the shutdown lasts for any significant amount of time, expect the sales numbers to be down from usual as the banks have to delay closings while waiting for FHA to get back up and running (and then catch up with the mounds of back paperwork that will build up during the shutdown).

Just what we needed…an interruption to the housing industry.