On September 29, 2023, NAR (National Association of REALTORS®) issued a Call For Action (CFA) regarding the possible government shutdown surrounding budget discussions.
One of the many concerns highlighted by NAR was the impact on the National Flood Insurance Program (NFIP). While a Continuing Resolution was passed on Saturday, September 30th, the CR only extends federal government funding to November 17, 2023.
NAR has extended its CFA for the next 45 days (11/17/23) as NAR Advocacy works with Congressional leaders to reauthorize NFIP. As part of NAR’s member education efforts, NAR has released a primer to the effects on the real estate industry of a government shutdown.
Here is a quick overview of the concerns NAR identifies in the primer:
EPA (Environmental Protection Agency): EPA provides a guide to its shutdown plan on the EPA website. Most employees will be furloughed. The agency would cease to issue new grants, update the EPA website, conduct research or publish research results, some Superfund inspections, approvals of pending state requests, and some other activities.
FHA (Federal Housing Administration): HUD will continue to endorse Single Family Mortgage Loan Program loans except HECM and Title 1 loans. Contractors managing the REO/HUD portfolio will continue to operate. If NFIP lapses, borrowers will be able to get flood insurance from the private market. HUD provides a resource if a shutdown does occur.
Fannie Mae & Freddie Mac: Fannie Mae and Freddie Mac usually retain normal operations, but may be impacted by other agency shutdowns. Verification of Employment, Tax Transcripts, and verification of Social Security Number are some of the possible delays.
IRS: The agency has not released a shutdown plan, but based on past shutdowns it is assumed staff would be cut and only allowed to work on items that protect the government. An example would be opening mail containing checks and depositing the funds.
NFIP: If a shutdown occurs, NFIP cannot sell or renew flood insurance policies.
Rural Housing Programs: The USDA ( U.S Dept of Agriculture) will not issue new rural housing direct or guaranteed loans. Already scheduled closing for Direct Loans will not occur. Guarantee loans would close at lender’s risk.
VA (Veterans Administration): VA has not issued a shutdown plan. Borrowers should expect delays if a shutdown should occur.
SBA (Small Business Administration): SBA will not approve or process most loans. PPP loan forgiveness applications will continue to be processed.
Visa Programs – EB5 and H2B: It is anticipated the EB-5 program will continue to operate although will be negatively impacted by the shutdown of other agencies. Processing of H-2B Visas will be halted. Other services will be reduced or eliminated.
There are other items discussed in the NAR Primer: What the Government Shutdown Means