Following the still unresolved dispute in the Senate over the immigration program DACA, the government continues to be shut down for the third day this Monday morning.
A temporary measure to fund the government through Feb. 8 overwhelmingly passed the Senate in an 81-18 vote. Once clearing the Senate, the measure will move to the House, where if approved, it will be presented to President Donald Trump to sign.
But what happens to the real estate market during a government shutdown?
During a shutdown, the Internal Revenue Service (IRS), Social Security Administration (SSA) and the Department of Housing and Urban Development (HUD) furlough a large number of employees, which may significantly delay a mortgage approval until the shutdown is lifted.
Sierra Pacific Mortgage will continue to operate as usual. However, mortgage applications that include tax records and other information requiring certification from government agencies will be affected.
Fannie Mae and Freddie Mac, although being government-sponsored organizations, are not government agencies and therefore will remain unaffected.
Borrowers who apply for loans through the Federal Housing Administration (part of HUD) or the Department of Veterans Affairs will likely face delays. Nearly all of the HUD’s 8,500 employees are barred from working during a government shutdown.
Will this government shutdown negatively impact our economy or housing market?
The likelihood of a negative impact on our economy is generally thought to be negligible since mortgage approval would resume eventually. During the last government shut down in October 2013, the government was shut down for two weeks but recovered soon after government employees returned to work.
Although it was a big deal for the government to shut down for a couple of weeks, the overall impact for both housing and the economy did not seem to show any lasting negative effects. This previous history could still be proven wrong, but judging by our most recent history, the industry doesn’t seem to be too concerned.