The current continuing resolution providing funding for government operations is set to expire today. If legislation to extend funding is not signed into law after today, the federal government could shut down. This means many, but not all government programs, including some that impact federal housing and mortgage programs, could grind to a halt as early as tomorrow, April 9. While the true impact of a shutdown is unclear until it actually begins, below is a synopsis of how federal housing programs will likely operate in the event of a shutdown.

The Office of Management and Budget requires each agency to have contingency plans in place and reportedly has instructed agencies to not provide specific information on impacted operations.

Federal Housing Administration
FHA cannot offer endorsements for any new loans in the Single Family Program and cannot make commitments in the Multi-Family Program in the event of a shutdown. FHA will maintain operational activities, including paying claims and collecting premiums. Management & Marketing Contractors managing the REO portfolio can continue to operate.

VA Loan Guaranty Program
Lenders may continue to process and guarantee mortgages through the Loan Guaranty program in the event of a government shutdown.

Internal Revenue Service
Should the federal government shut down, the IRS cannot process federal income tax returns or issue refunds (but it can deposit tax payments). Consumers who were expecting to use their tax returns as part of the down payment for a home purchase will temporarily not have access to these refunds.

Flood Insurance
The Federal Emergency Management Agency confirmed that the National Flood Insurance Program will not be impacted by a government shutdown.

Rural Housing Programs
For U.S. Department of Agriculture programs, essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees and modification approvals. Thus, lenders will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA underwriter approves the loan. If a commitment was already issued, the funds were already set aside, the lender may close the loan at his leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.

Government Sponsored Enterprises
Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency.

No official word as of yet, but the Making Home Affordable program, including HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternatives), may not be affected because the program is funded through the Emergency Economic Stabilization Act, which is mandatory spending, not discretionary.

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