If you currently have a government-backed mortgage, your loan will continue to be processed and backed by the FHA even though the government is in shutdown mode. If you are looking to apply for a government backed mortgage, applications are still being processed by the FHA although they are running at about 4% of their capacity with nearly all (96%) of FHA staff are on furlough. The FHA is part of the Department of Housing and Urban Development’s Office of Housing, and there are currently 64 of the 2,972 staff tasked with pending loans and new applications.
"The HUD Contingency plan posted on Friday mistakenly included incorrect information about a potential shutdown's impact on the FHA single-family loan program," HUD said in a statement. "FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans."
So for now, during the government shutdown, it seems that loans will continue to be processed however home buyers should expect delay in the processing. Hopefully we will be back on track soon and FHA staff can return to work as we are moving closer to a stable housing economy. According to the federal reserve, Federally-backed loans made up 45% of all mortgages used to purchase a home in 2012.
Lenders will be able to continue as well, provided they have “delegated authority” to do so and approximately 80 percent of lenders have this authority. The lenders will continue to go through the FHA case numbers using an automated on-line service.
Economists and Real Estate Market experts are closely following the decisions of the FHA to predict the impact on the market in the next coming months. If the shutdown continues longer than a week, it could impact the market recovery and mortgage rates.