And How the Government Shutdown Impacts Your Home!!

Default On U.S. Debt Could Hurt Homeowners


The federal government shutdown has slowed some  housing programs and closed others, although several important programs, including FHA's loan program, have stayed open.

Unfortunately, if the government defaults on its debt, interest rates could go up, the National Association of Realtors (NAR) warned a Senate panel.

When interest rates rise 1 percent about 450,000 middle-class homeowners are priced out of the real estate market, NAR says.

Rising rates could also push up payments for adjustable-rate mortgages, home equity lines, credit cards and auto loans. 

Meanwhile, the federal government shutdown has closed some housing programs, while others continue to operate. Here's the latest on what's open and closed:

FHA: Lenders can continue to make single-family home loans. Make sure your Social Security number, name and address are correct on your loan application because the Social Security Administration system that verifies that data is operating on autopilot. A mistake can stop your loan application in its tracks.

Fannie Mae and Freddie Mac: Fannie Mae and Freddie Mac are open, but there's a catch. With the IRS shut down, lenders can't verify your tax and income information--something they have to do before they sell your mortgage to Fannie Mae or Freddie Mac. Lenders are using their own funds to make mortgages that they'll sell to Fannie Mae and Freddie Mac when the shutdown ends.

VA: Veterans can get mortgages, but expect delays.

FEMA Flood Insurance: The National Flood Insurance Program is open. However, engineering surveys for flood insurance certificates generally rely on U.S. Geodetic Survey readings and that website is closed.

USDA Rural Housing Loans: This program is not running during the shutdown. If your lender had a commitment for your mortgage and the funds were set aside, you can close your loan. Otherwise you'll have to wait until the government opens again to get your loan closed.

Programs for Troubled Homeowners: The federal Making Home Affordable programs are open to help homeowners avoid foreclosure. 

Department of the Interior, Bureau of Indian Affairs: Transactions on leased Indian Tribal Land won't be processed or recorded during the shutdown.

Photo source: U.S. Capitol Visitor Center

Courtesy of Al Clark HomeActions Newsletter