Monday, September 30, 2013

FHA May Not Shut Down Right Away

Updating an earlier post...

If the federal government shuts down at midnight tonight, FHA may hum along, although gasp may be a better term than hum.

Andrea Bramblia of Inman News reports that H.U.D. has reversed its earlier position. It will continue to endorse new loans in order to minimize disruption of the housing market.

Most sources say that if the government shuts down, programs needing appropriations will be curtailed. FHA falls into this category unlike, say, Medicare or Social Security, which are mandatory entitlements and are already funded.

Funding for single-family home loans received multi-year appropriations, so the pipeline isn't dry just yet (multi-family funding is another story). H.U.D. (and, therefore, FHA) will continue top operate, although at slower levels than before. If the federal shutdown doesn't last too long, operations won't be severely affected. But if it lasts a long time and the commitment authority runs out, home loans will be impacted.

Other sources have reported a similar story.