Housing Groups and Biden Team Speak Out on Shutdown Risks
As the clock ticks closer to midnight on September 30th, the possibility of a federal government shutdown looms larger, drawing grave concerns from lawmakers, federal officials, and key stakeholders in the U.S. housing sector. The inability of the U.S. House of Representatives Republican majority to pass government funding measures threatens to bring wide-reaching consequences, affecting everything from mortgage loans to housing discrimination enforcement.
President Biden weighed in on the crisis, citing the far-reaching implications a shutdown could have, particularly on vulnerable communities. “A shutdown will risk nutrition aid to nearly 7 million mothers and children, disproportionately affecting Black families. Moreover, the Department of Housing and Urban Development (HUD) would have to halt almost all its initiatives aimed at combating housing discrimination,” he stated during a White House event.
Several organizations, such as the National Low Income Housing Coalition (NLIHC), the National Association of Realtors (NAR), and the Mortgage Bankers Association (MBA), have joined the chorus, warning of disruptions that could cripple the housing and mortgage markets. NLIHC is urging concerned citizens to directly contact their representatives through its legislative resource pages. MBA President Robert Broeksmit assures its members that advocacy will continue to prevent the detrimental effects of a shutdown.
Tom Vilsack, U.S. Secretary of Agriculture, also expressed concern about how a shutdown would disrupt USDA-backed home loans. “Newlyweds dreaming of buying their first home in rural small towns could see their dreams shattered. Shutdowns freeze these kinds of loan transactions, potentially causing these families not just inconvenience but financial hardship,” he stated.
In a recent update, NAR covered a broad range of potential consequences, extending from the Environmental Protection Agency to FHA, Fannie Mae, Freddie Mac, and USDA rural housing programs. They also noted that past shutdowns allowed the Department of Veterans Affairs to maintain its loan guarantee service but emphasized that each shutdown brings its own set of challenges.
Adding another layer of complexity is the uncertainty surrounding the National Flood Insurance Program (NFIP). A lapse in NFIP could exacerbate the housing sector’s problems, affecting both buyers and sellers.
The reverse mortgage industry will also take a hit as no new Home Equity Conversion Mortgage (HECM) loans could get Federal Housing Administration (FHA) endorsement during a shutdown.
With several agencies yet to announce a contingency plan, the situation remains fluid, leaving millions in a state of uncertainty and anxiety as the end-of-month deadline looms ever closer.
