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David Rudd, Real Estate Pro in San Diego, CA

How do you think the government shutdown (if not avoided) will impact the housing market?

Asked by David Rudd, San Diego, CA Mon Sep 30, 2013

It looks like a government shutdown is likely. Forget parties - how do you think this will impact the housing market and your business?

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If it's extremely short lived, it's impact won't be noticeable, but if it lasts for more than a week or two, I think we'll start to see the impacts. The impact will begin where the government is shutdown (FHA, HUD, etc). These agencies with shuttered doors will hold up and delay all sorts of processes, some to the point where actual market deals with begin to fail (either on the primary or secondary market). Once deals are failing, it's impact will be noticeable beyond just "delays". Honestly, I hope we're not shutdown but for more than a day or two. It would be political suicide to keep it shutdown for too long. People forget, but our government does a whole host of things and when it's taken away, they'll be quick to notice.
1 vote Thank Flag Link Mon Sep 30, 2013
First of all, we cannot forget parties because Obamacare was done without the input from Republicans, not a single Republican voted for Obamacare, and this is the last opportunity WE THE PEOPLE have to defund that monstrosity that kills jobs, kills hours and overall kills our economy.

If people want Health care so much, then they need to get off their collective behinds and get a job. The liberals speak of all the pre-existing conditions that will now be covered, guess what. If you are hired to a new job, the insurance HAS ALWAYS taken those pre-existing conditions.

These liberals are being funded by the Unions, and guess what, the Unions oppose Obamacare, Corporations oppose Obamacare, Small business owners oppose Obamacare, and Government opposes it (by getting the exemption from Obamacare).

Not stopping Obamacare will hurt the housing market, lets see how many qualify for a mortgage if they are working part time?

We have out of control spending that needs to be slowed so that we are not borrowing 44 cents per every dollar we take in...

Hector R. Gastelum
Realty Executives Dillon
REALTOR #01382940
2240 Otay Lakes Rd.
Chula Vista, Ca 91915
hectorgastelum@yahoo.com
619-954-2225
1 vote Thank Flag Link Mon Sep 30, 2013
Thanks for not keeping it political.
Flag Tue Oct 1, 2013
Wow Hector! One excellent point after another. Thanks for the great input.
Flag Mon Sep 30, 2013
The longer the government is shut down, the more the housing market will improve.
1 vote Thank Flag Link Mon Sep 30, 2013
That's a true story. Thanks John.
Flag Mon Sep 30, 2013
Some immediate impacts of the shutdown as they relate to real estate:

FHA Halts “Reverse Mortgage” Insurance During Government Shutdown.

While HUD is maintaining some of its operations during the government shutdown, it has ceased insurance of Home Equity Conversion Mortgages due to a cap on the number of HECMs that can be insured by law.

All mortgages purchased and securitized by Fannie Mae and Freddie Mac will not be affected.

Federal Housing Administration (FHA) loans: With the shutdown, we may see delays, but not a complete stop to FHA loan closings.

A report from the U.S. Department of Housing & Urban Development (HUD) has stated that FHA's Office of Single Family Housing will remain open for business, albeit with a smaller staff.

The office will continue to endorse loans and it doesn't expect the impact on the housing market to be "significant, as long as the shutdown is brief."

Department of Veterans Affairs (VA) loans: Like the FHA, disruption is possible, but not absolute. The VA will continue to guarantee mortgages for Americans who have served in the military, since these loans are funded by user fees.

It warned, however, in its Sept. 25th contingency plan, that Loan Guaranty certificates of eligibility and certificates of reasonable value may be delayed.

IRS Tax Transcripts: If a loan requires the verification of at least one previous IRS tax return, this process may be delayed.

While prior years' tax transcripts can be ordered online, 2012 taxes filed within the last 60 days will not.

Verifications of Employment, for Government Employees: If a federal government employee is seeking a mortgage, and his employment verification is required prior to closing, a lender may be unable to verify this during a shutdown.

FEMA Homes: Homes in flood zones would not be able to close, as flood insurance could not be obtained.

USDA Loans: During the shutdown, the Dept. of Agriculture's doors will be shuttered.

According to the USDA, no new housing loans or guarantees will be issued through its Rural Development programs.

The USDA has also warned that a long shutdown will result in construction setbacks and "a substantial reduction" to available rural housing relative to population.
0 votes Thank Flag Link Thu Oct 10, 2013
The IRS will not be responding to form 4506-T (request for taxpayer records). Virtually all lenders are requiring this form be completed as a way to verify Social Security numbers and tax returns, this is a condition for loan approval. Any loans that have not had a response to 4506-T will be stalled until the shutdown is over with.

HUD is said to be sending 96% of its workforce home so if you have a buyer purchasing a HUD property you can expect delays.

FHA is sending home approximately two thirds of its workforce and making single family homes a priority. All buyers with FHA loans can expect delays. However, buyers purchasing multi-family homes with FHA loans can expect to wait for the shutdown to be over until moving forward.

Veterans using their VA home loan benefit may or may not experience problems as some VA lenders are "fully delegated and funded" meaning that they were already were working with full authority from the VA to process loans. VA lenders without fully delegated authority will be stalled.

Buyers and sellers nearing the completion of their transaction should not feel an effect except where noted above. Home shoppers and sellers are advised to continue business as usual with the understanding that timelines may have to be adjusted in order to accommodate waiting on government entities affected by the shutdown. Buyers and sellers currently in a transaction should contact your real estate agent to see if you are affected.

Cash buyers and buyers with tax returns already verified by the IRS will have an added advantage of not having to wait for the shutdown to be over. There might be a window of opportunity with sellers that have a need to sell quickly.


J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
619-929-0105
0 votes Thank Flag Link Tue Oct 1, 2013
Unfortunately in the long run I believe it will hurt the housing market as it will most definitely disrupt the financial markets in a negative manner.
0 votes Thank Flag Link Mon Sep 30, 2013
I think a shutdown will have virtually no negative impact on the housing market or my business.
0 votes Thank Flag Link Mon Sep 30, 2013
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