When the Shutdown Hits Home

The government shutdown of 2018/2019 has been, as of this writing, an unprecedented 35-day hardship for approximately 800,000 federal employees. The shutdown began on December 21st; on December 26th Federal Emergency Management Agency (FEMA) issued a stop-work order to all contractors, and on December 28th the Environmental Protection Agency (EPA) ran out of funds and furloughed approximately 95% of its employees.

On January 4th, the Department of Housing and Urban Development sent letters to 1,500 landlords asking they not evict residents in housing programs, including those with Section 8 vouchers, for which funding lapsed. Federal employees missed their first paycheck on January 11th, and their second on January 25th. Also beginning on January 25th, some federal workers will begin to lose dental and vision insurance unless they pay premiums directly.

A prolonged shutdown can have far-reaching consequences as consumer confidence declines; economic uncertainty about the future can impact homebuyers’ decisions to purchase a home. Processes of the home-buying process may be impacted as well. Fannie Mae and Freddie Mac are not typically impacted; however, without a verbal verification of employment from a federal employer the loan approval could be denied or delayed. Increasing backlog for Federal Housing Administration (FHA) loans could cause closings to be delayed, and USDA loans will not be processed. 

Current homeowners who have mortgages may be able to work with their lenders during the shutdown to ensure their loan remains in good standing. Delayed payments, waived late fees and even furloughed-employee refinance programs are options offered by some mortgage lenders. Assistance programs have been announced by USAA, Navy Federal, PenFed, FedChoice, Wells Fargo and more. Cities such as Denver and Washington, D.C. announced programs to assist federal workers. Homesnap, a real estate site and app, is offering to pay one full rent or mortgage payment for 10 impacted federal workers. 

While the longest government shutdown will have long-lasting impact on the confidence and morale of many, resources are available to alleviate some of the burdens of the moment. 

Header image sourced from HousingWire.