If you’re worried about the federal government shutdown because you’re refinancing your mortgage or buying a home with help from an FHA, VA, or Fannie Mae or Freddie Mac loan program, or you need federal flood insurance, relax. The shutdown isn’t likely to cause problems for you.
That is unless you’re using the U.S. Department of Agriculture 502 rural housing loan program, which helps folks buy homes in rural areas. In that case, you’re toast until Congress agrees to fund the federal government again.
USDA’s rural housing loan program typically runs out of money at the end of the fiscal year (Sept. 30), if not sooner, and then starts making loans again when the next fiscal year starts Oct. 1. This year, there’s no FY 2014 budget agreement so that means no more USDA home loans until Congress funds a budget. However, if your lender got a conditional approval before the shutdown, the lender can move forward on your loan.
Here’s the rundown on the homeownership programs that will stay open even while the federal government is shuttered:
- FHA will continue to insure loans because its guarantees support the health and stability of the U.S. mortgage market. Expect some delays because of staffing shortages.
- The VA’s loan program will go on because it’s funded by veterans' loan fees. As with FHA, expect some delays related to staffing.
- Fannie Mae and Freddie Mac loan programs will be up and running because they aren’t federal agencies (although they’re under federal conservatorship).
- FEMA will continue to sell and service flood insurance policies and fund disaster relief for homeowners, since the program is funded by premiums and not taxes. This won’t affect the flood insurance program rate changes set to kick in on Oct. 1, 2013.
Published: October 1, 2013
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