Prolonged Shutdown Could Impact Housing Market
ABC News RadioFri, 04/08/2011
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Stockbyte/Thinkstock(WASHINGTON) -- The Federal Housing Authority will stop accepting new loans in case of a government shutdown. According to Inside Mortgage Finance, 19 percent of all home mortgages originated last year were FHA loans, so a shutdown of more than a few days could have affect the already suffering housing market. Smaller lenders will likely be more affected.
Wells Fargo, Bank of America and Citibank, three of the five largest mortgage services in the country say that a shutdown will not have a significant impact on their operations. A spokesperson for Bank of America said that the bank will, “continue originating and closing FHA and VA mortgages in the event of a short term shutdown.” A Wells Fargo spokesperson said that they don’t expect the shutdown will be an issue in most cases. Similarly Citibank said in a statement, “we do not anticipate changes to our mortgage business in case of a government shutdown.”
PHH mortgage, a significantly smaller mortgage service, expressed a bit more concern. The bank said in a statement that they will, “continue registering and closing government loans, to the extent that required documentation and approvals can be obtained” but added that they “would counsel borrowers that potential delays may be caused by a shutdown.”
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