Federal Shutdown May Impact Real Estate Transactions

Federal operations may experience disruptions moving forward after Congress failed to pass funding legislation by the Sept. 30 deadline, which threatens an estimated 1,400 property transactions per day. The National Association of Realtors®’ advocacy team continues to closely monitor the situation, and NAR staff will work with Congress, the administration and industry partners to evaluate and address impacts on NAR members, their businesses and their clients. And NAR’s federal political coordinators have been reaching out to their elected representatives to explain the impact the shutdown will have on the industry.

The shutdown could impact the real estate industry, particularly in housing, mortgage and other programs, such as the National Flood Insurance Program. Every day the shutdown continues, potential real-life impacts will be felt in the housing market, which accounts for nearly 20% of the U.S. economy.

NAR has outlined eight programs where NAR members may experience an impact during the shutdown. Those programs include:

• National Flood Insurance Program (NFIP) – cannot sell new or renewal insurance policies during a lapse.
• Government-Sponsored Enterprises (Fannie Mae and Freddie Mac) – in the past, these entities have continued normal operations; however, four key areas may be affected (verification of employment, tax transcripts, verification of Social Security numbers and proof of flood insurance).
• Internal Revenue Service – has not published shutdown contingency plans.
• Rural Housing Programs – during a shutdown, the U.S. Department of Agriculture will halt issuance of new direct and guaranteed home loans, and any scheduled direct-loan closings will be postponed.
• Veterans Affairs – the Department of Veterans Affairs will continue to guarantee home loans, and lenders may continue to process applications. Some VA staff and support may be reduced, which may slow down approvals.
• Environmental Protection Agency – during a shutdown, most employees will be furloughed.
• HUD Programs – many key housing programs will continue, although at reduced capacity, while others face significant disruption.
• Small Business Administration – during a shutdown, the SBA will not process new loans or approve routine small-business loans.

NAR has provided an online update on what Realtors® may see during the shutdown. Additional information is available in an NAR memo for members.