Question: How will my mortgage be impacted if the government runs out of funding at midnight on Friday?
Answer: Essential military, Homeland Security, Boarder Patrol, Air Traffic Control, Federal Prisons, and the Post Service, which is self-funded, will continue to operate as normal. However, approximately 800,000 Federal employees would be furloughed, shutting down FHA, VA, and USDA just to name a few.
FHA/VA would be inconvenient, but would not hurt the mortgager business unless the shutdown was prolonged (30 days or more). We would not be able to get FHA/VA loans insured or guaranteed but we would still be able to approve, close, and fund those loans. USDA would be a little different in that if the loan was not approved by the field office, it would not get approved until workers physically returned. This would delay closings unless the loan had been prior approved by both PrimeLending and the field office.
Fannie Mae/Freddie Mac would not disrupt business as they are under conservatorship and not considered to be Federal employees (best of my knowledge). Ginnie Mae could be a factor as they would be shut down, but at this time I am not sure what the impact would be on issues pools that retain FHA/VA loans.
At this point, lawmakers are trying to reach a compromise with so much at stake. We believe a last-minute agreement will happen but that has yet to be seen. Bottom line is PrimeLending should be able to operate without any issues unless a shutdown happens AND is prolonged. We’ll update you with new info as we see it.
As far as the market is concerned, 10-year notes are off 3/32’s (yield 3.56%), mortgage backs are unchanged, and stocks are off 61 points on the big board.
If you or someone you know has questions about home financing, please call Max Leaman (512) 293-1239.