Tags: housing | mortgage | recovery | shutdown

Forbes: Government Shutdown Could Trim the Sails of the Housing Recovery

By    |   Tuesday, 08 October 2013 08:02 AM

The housing recovery — one of the bright spots in America's fairly tepid economy — could take a tumble with the government shutdown. That's because more than 90 percent of all loan activity is underwritten, insured or owned by the government and its affiliated entities, according to Forbes.

The good news is that Fannie Mae and Freddie Mac, the giant quasi-government entities that are deeply entwined in the nation's mortgage purchases and securitization activities, are largely unaffected by the shutdown because their operations are funded by fees paid to lenders.

And the Department of Veterans Affairs (VA) likewise will continue to guarantee mortgages for Americans with military service, since their loans are funded by user fees, also.

Editor’s Note:
Add Up to $152,046 to Your Social Security Benefits Using Weird Trick

"Initially at least, the mortgage market is likely to be only minimally impacted," Forbes stated. "What will change is how long the process takes, as many agencies expect to experience delays."

For instance, the VA noted that in the 1995-96 government shutdown, necessary mortgage certificate paperwork was delayed.

And the Federal Housing Administration (FHA), which endorses about 15 percent of the nation's single-family mortgage market, will be cut back to smaller staff during the shutdown, Forbes reported.

The U.S. Department of Housing and Urban Development (HUD), which the FHA is a part of, said a short government shutdown will not have much impact on housing.

"If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market," a HUD reported stated.

Lawrence Yun, chief economist at the National Association of Realtors, told Forbes he was concerned that if prospective homebuyers begin to fret that the economic recovery is stalling, they will stop their purchases.

“Administratively everything should keep moving along, but it’s more about the confidence of consumers and whether they perceive that the government shutdown could lead to a recession,” Yun explained.

Other loans are also being affected. The government impasse has brought a halt to the U.S. Small Business Administration's (SBA) ability to process new loan requests, The Washington Post reported.

Even though the SBA in recent weeks rushed through many applications in anticipation of a shutdown, The Post said there are many left in the pipeline.

Editor’s Note: Add Up to $152,046 to Your Social Security Benefits Using Weird Trick

Related Stories:

WSJ: 5 Reasons Not to Jump Into the Housing Market

Government Shutdown Seen Threatening Housing Recovery

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
Personal-Finance
The housing recovery — one of the bright spots in America's fairly tepid economy — could take a tumble with the government shutdown. That's because more than 90 percent of all loan activity is underwritten, insured or owned by the government and its affiliated entities, according to Forbes.
housing,mortgage,recovery,shutdown
418
2013-02-08
Tuesday, 08 October 2013 08:02 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved