How is the Government Shutdown Affecting Real Estate?

While the government is in disarray due to views on the Affordable Care Act and the debt ceiling, experts are expecting massive delays on receiving Federal Housing Administration loans if the shutdown lasts for a good stretch of time.

According to, if the government shuts down for more than 30 days, real estate could take a vast decline.

The last time the U.S. had a government shutdown was in 1996, and it lasted for 26 days according to Yahoo News. During that period of time, the hiatus of the government did interfere with home loans, which were put on hold according to

Due to the shutdown, the FHA staff has decreased in numbers, which could cause heavy delays of process and/or closing of FHA insured loans according to the U.S. Department of Housing and Urban Development.

However, according to the LA Times, on the third day of shutdown new mortgage applications went through the process of the paperwork like usual. The Processing of loans from the FHA and the Department of Veterans Affairs are doing business as usual with major lenders that are preauthorized to issue these loans.

Wells Fargo & Co. and JPMorgan Chase & Co., are operating the same way as before the shutdown occurred. Wells Fargo, a lender that has the authority to process and approve FHA and VA loans, feels that these mortgages could become problematic if buyers were laced outside of the predetermined guidelines for credit scores or income. This would enforce buyers to need special approval for government loans, according to a spokesperson of Wells Fargo that spoke with the LA Times.

Experts feel that buyers should discuss the right timeline and expectations with their lender to seek permission of expanded commitments, longer rate locks and extended policies for both of the foresaid according to the LA Times.

However in day four of the shutdown, there is little change in receiving an FHA loan for San Diego real estate.

By Linda Moore

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