Government Shutdown -- What it means for Buyers and Sellers

by AtHome Team

No doubt by now you’re aware of the federal government shutdown. Like many of our clients, you may be wondering what services, if any, will be impacted and how will that affect your deals in process or potential new closings.

We have lived through these shutdowns in the past and the four biggest areas of impact are:

Social security verification
Tax transcripts from IRS
USDA Rural Housing loans
FEMA Flood Insurance policies (Privately provided policies are ongoing and unaffected by the shutdown) Update: we have seen one provider stop issuing policies but still have many others that are full steam ahead. I would recommend clients shop for flood insurance asap if they are under contract on a property that will require coverage.

Fortunately, investors were aware of the potential for a shutdown, and we have processes in place to successfully manage most of these outages. In short, we anticipate little, if any, impact to daily operations and look forward to see you at a closing table soon. 😊

Below is a more detailed synopsis of the impact of the shutdown to federal housing programs.

HUD

While HUD is still waiting for final approval of its contingency plan from the Office of Management and Budget (OMB), it is now expected that key elements of the FHA single-family program and Ginnie Mae programs will remain operational. However, HUD Headquarters and Field Offices will be closed and there will be limited staff available to answer emails or telephone inquiries.

Will continue to endorse single-family loans

They have multi-year loan guarantee commitment authority that will keep insurance authority operational for the foreseeable future
Lender Insurance will remain operational as long as they have commitment authority

There may be delays in endorsing loans requiring FHA processing

HECM (Home Equity Conversion Mortgages) and Title I loans will not be endorsed. These are reverse mortgages.

Key systems will remain operational

FHA Connection

Case numbers will be available
TOTAL Scorecard will be available

Lender Electronic Assessment Portal (LEAP)
Loan Review System (LRS)
Neighborhood Watch
Catalyst
CAIVRS

However, it will be lender responsibility to ensure that information is up-to-date (i.e. checking public records, credit reports, etc.)

MIP Collections

Lenders will be responsible for submitting both upfront and monthly premiums in a timely manner

Resource Center will remain operational since it is staffed by contractors

However, responses to complicated questions requiring escalation may be delayed until the government reopens

Condominium processing

DELRAP processing will continue.
However, HRAP processing will not be available

Servicing

FHA will continue to pay partial claims to facilitate workout agreements
Servicers can continue to file claims and convey properties
Servicers must continue to submit delinquency information through SFDMS

Ginnie Mae

Will continue to issue commitment authority
Will continue to issue mortgage-backed securities
Will continue to receive/process monthly MBS loan and payment accounting data
Will continue to pay contractors (as long as they are necessary to carry out Ginnie Mae functions)
Will continue to monitor Issuer Default activities
Will continue to review and process mortgage servicing rights (MSR) transfers

Housing benefits "will continue to be processed and delivered”
VA has stated that it will continue to operate its loan guaranty programs for the foreseeable future using available funding from previous budgets

However, available staff to answer questions will be diminished since approximately 70% of Veterans Benefits Administration staff (which includes loan guaranty staff) are funded through annual appropriations and are expected to be furloughed in the shutdown

USDA

Approximately 80% of Rural Development (RD) staff will be furloughed.
USDA will not issue guarantee loan conditional commitments during the shutdown

USDA has also emphasized that they will not guarantee loans that were closed during the shutdown without conditional commitments
Link: https://www.usda.gov/sites/default/files/documents/fy2026-usda-lapse-plan.pdf

National Flood Insurance Program (NFIP)Sales

FEMA cannot issue new or renew flood insurance policies during a shutdown
Existing policies will remain in effect until the policies expire
Private policies can be accepted
Buyers can still assume an existing policy on a new home purchase, assuming carrier authorizes

Reach out to Ashley with any questions or concerns:

Ashley Milam

NMLS: 2020190

Mortgage Banker

O: 770.655.5105

E: ashley.milam@highlandmtg.com

W: www.highlandmtg.com