FHA: Closed for Business?
For those that work in Washington, DC, you may have noticed commuter traffic that’s been lighter than usual this week. That’s a positive impact of the government shut down. A big negative for Real Estate investors is the furlough of Federal Housing Authority employees.
Late Monday, the Federal Housing Authority announced an error in their previously reported strategy for the pending government shutdown. It appeared that a shutdown would mean the halt the processing of all FHA backed loans. Thankfully, this is not the case.
The FHA had committed to continuing loan processing and approvals. But that might be a bit difficult as they plan to send 96% of the work force home. Fewer employees will likely lead to longer processing times. Be sure to consider these delays when estimating a closing time frame.
The Federal Housing Authority underwrote 45% of all residential loans in 2012. A slowdown in their approval process will have an impact on the Real Estate market in general. If FHA is closed for business (or even just slow), so is 45% of the market.