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Government Shutdown Ends

October 16, 2013

Late Wednesday night, the House of Representatives passed a bill ending the shutdown of the federal government. The bill was passed by the Senate earlier in the day. President Obama has signed the bill into law.

Under the agreement reached, a continuing resolution funding government operations through Jan. 15, 2014 is enacted. The measure also raises the debt ceiling to a projected date of Feb. 7, 2014. The Senate will also consider another separate proposal to instruct House and Senate negotiators to reach accord by Dec. 13, 2013 on a long-term blueprint for tax and spending policies over the next decade.

Although the legislation reopens the federal government immediately, there could be residual delays in programs as workers address issues caused by the 16 day lapse.

REALTOR.org will keep the shutdown information available over the next several days as government operations return to full capacity.

 

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Government Shutdown Updates


Editor's note: The information below dates prior to passage of the Oct. 16 bill. The information is being kept on the page for reference purposes.

 

Quick Links

Status Information Index

 

Department of the Interior – Bureau of Indian Affairs (BIA)

(as of Oct. 3, 2013 2PM ET)

BIA has announced that there will be no processing or recording of property transactions on Leased Indian Tribal Land during the government shutdown.


Previous Updates

There were no previous updates for the Bureau of Indian Affairs (BIA)

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Federal Housing Administration (FHA)

Latest Status Information (as of Oct 7, 2013 4PM ET - updated text is highlighted in bold)

HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate.  You can expect some delays with FHA processing, due to short staffing and associated delays with other agency requirements (see IRS and SSA). On Oct. 4, HUD issued a detailed list of Q&As, with emphasis on ways in which to verify Social Security numbers.

Previous Updates

Oct. 1, 2013 7AM ET - HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate. You can expect some delays with FHA processing.

Sept. 30, 2013 4PM ET - In anticipation of a possible shutdown, NAR is consulting with officials from the U.S. Department of Housing and Urban Development, Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA, and the Rural Housing Service, among other agencies, and will post information on how a shutdown is expected to affect these agencies’ operations.

As of early afternoon today, Sept. 30, lawmakers were discussing short-term budget legislation, called a continuing resolution, to pay for federal government operations after midnight tonight.

FHA Single Family Housing: 

HUD officials have updated NAR concerning the status of FHA with a Federal Government shutdown looming at midnight eastern time.

  • The Office of Single Family Housing will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market. (FHA endorsements currently represent 15% of the market.) Approximately 80% of FHA loans are endorsed by lenders with delegated authority. The remaining 20% are endorsed through the FHA Homeownership Centers, leveraging FHA staff with a contractor that works on-site.
  • The Office of Single Family Housing will maintain the minimum operations necessary to support FHA’s existing portfolio.
  • The FHA Call Center and the National Servicing Center’s Call Center will remain open.
  • Any function of FHA that is funded through a multi-year appropriation or where the failure to perform those functions would result in an imminent threat to the safety of human life or the protection of property will continue. FHA's portfolio of insured mortgages – multifamily, healthcare, and single family, as well as commitments entered into for project-based rental assistance are within those functions.
  • The Office of Housing will continue to work on planned sales of defaulted notes, as required for the orderly termination of HUD’s fiduciary insurance and servicing obligations

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Flood Insurance

(as of Oct. 1, 2013 7AM ET)

The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown, since NFIP is funded by premiums and not tax dollars. Changes to the flood insurance program scheduled to take effect on Oct. 1 will be implemented as scheduled.


Previous Updates

There were no previous updates for the National Flood Insurance Program.

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Government Sponsored Enterprises

(as of Oct. 7, 2013 4PM ET - updated text is highlighted in bold.)

Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency, since they are not reliant on appropriated funds. Both Fannie and Freddie have announced relaxed procedures that will permit closings to go forward without federal verification of Social Security numbers and IRS tax transcripts.

However, lenders will have to obtain federal verification of both before the GSE’s will accept loans for purchase. Moreover, the relaxed requirements do not apply to loan modification re-financings.


Previous Updates

Oct. 1, 2013 7AM ET - Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency, since they are not reliant on appropriated funds.

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Internal Revenue Service (IRS)

(as of Oct. 3, 2013 2PM ET - updated text is highlighted in bold.)

The IRS is closed and has suspended the processing of all forms, including requests for tax return transcripts (Form 4506T). While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted.

We have received indications that many loan originators are adopting revised policies during the shutdown, such as allowing for processing and closings with income verification to follow, as long as the borrower has signed a Form 4506T requesting IRS tax transcripts. On loans requiring a Form 4506T Fannie Mae and Freddie Mac have also adopted relaxed provisions allowing closings but subject to tax transcript verification before the GSEs purchase the loans.


Previous Updates

Oct. 1, 2013 7AM ET - The IRS is closed and has suspended the processing of all forms, including tax return transcripts (Form 4506T). These transcripts are required for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted.

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National Oceanic and Atmospheric Administration (NOAA) – U.S. Geodetic Survey

(as of Oct. 7, 2013 4PM ET).

Engineering surveys for flood insurance certificates often require the use of U.S. Geodetic Survey readings. Most web sites at NOAA are not operating during the government shutdown with the exception of sites that are utilized to protect life and property. The U.S. Geodetic Survey site has just come back, for use in the Gulf states only due to the imminent threat of a hurricane.


Previous Updates

There were no previous updates for NOAA.

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Rural Housing Programs

(as of Oct. 1, 2013 7AM ET)

For the U.S. Department of Agriculture programs, essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees, and modification approvals. Thus, lenders will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.

It is important to note that the traditional definition of “rural” for qualifying communities for assistance will be continued in effect during the shutdown.  We expect that language to continue the current definition will be included in whatever funding measure is eventually enacted.


Previous Updates

There were no previous updates for the Rural Housing Programs.

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Social Security Administration (SSA)

(as of Oct. 3, 2013 2PM ET - updated text is highlighted in bold)

The Social Security Administration is closed and has suspended most customer service functions.  According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing. As with IRS income verification, policies vary among lenders, with many choosing to exercise forbearance during the shutdown period subject to subsequent verification. Fannie Mae and Freddie Mac have also adopted policies to allow for closing subject to subsequent verification and before GSE purchase of the loan.


Previous Updates

Oct. 1, 2013 7AM ET - The Social Security Administration is closed and has suspended most customer service functions. According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing.

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Treasury

(as of Oct 1, 2013 7AM ET)

The Making Home Affordable program, including HAMP and HAFA, will not be affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory spending not discretionary.


Previous Updates

There were no previous updates for the HAMP and HAFA programs.

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VA Loan Guaranty Program

(as of Oct. 1, 2013 7AM)

Lenders will continue to process and guaranty mortgages through the Loan Guaranty program in the event of a government shutdown. Expect some delays during the shutdown.


Previous Updates

There were no previous updates for the VA Loan Guaranty Program.

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Background: What Does the Government Shutdown Mean for REALTORS®?

(Oct. 1, 2013 - 7AM) - Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on Sept. 30, 2013. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down. This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place. The information below is based on NAR staff review of agency agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns.