Government shutdown will delay thousands of mortgages every day

Halt in processing of VA, FHA loans

By Brian Wallstin
Headline Goes Here iStock/kroach

Thousands of new-home buyers every day could find their mortgages held up until lawmakers reach a deal to reopen the federal government.

The processing of mortgages backed by the Department of Veterans Affairs, the Federal Housing Administration and the Rural Housing Service would be delayed due to furloughs of federal employees. Some 3,500 mortgages would be held up each business day government offices remain closed, according to an analysis of closing data by Zillo.

The last government shutdown lasted 12 days, from October 1 -16, 2013. A shutdown that long this year would delay the mortgages of about 42,000 homebuyers, Zillow estimates.

While the federal shutdown would frustrate some homebuyers, it's impact the market wld be relatively small. Loans backed by the VA, FHA and RHS represent only a fraction of mortgages, compared Fannie Mae and Freddie Mac, which handle about two-thirds of all government-backed home loans. Those agencies receive government funding, but rely on non-federal workers.

 

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