With no budget agreement reached by Congress before midnight on October 1, a government shutdown has taken effect, resulting in the temporary suspension of various non-essential federal services.
With no budget agreement reached by Congress before midnight on October 1, a government shutdown has taken effect, resulting in the temporary suspension of various non-essential federal services.
While many mortgage-related operations continue during a shutdown, certain aspects of the loan process may be affected. Borrowers should be aware of potential delays and disruptions that could influence both new applications and existing loans.
Below is an overview of how a government shutdown may impact different areas of mortgage lending:
Effects on New Mortgage Applications
The impact on new mortgage applications often depends on the duration of the shutdown. In most cases, loans can still proceed, but some steps may take longer due to reduced staffing or limited access to government services:
- FHA Loans: The Department of Housing and Urban Development (HUD) continues to process select FHA loan types, though reduced staffing may lead to extended timelines.1
- VA Loans: The Department of Veterans Affairs (VA) remains active in loan origination, but borrowers may experience slower service.1
- Conventional Loans: Fannie Mae® and Freddie Mac® continue operations during a shutdown. However, lenders may face indirect delays if government documentation or verification services are required.2
- Flood Insurance Requirements: For properties located in FEMA-designated Special Flood Hazard Areas (zones A or V), flood insurance is mandatory. During a shutdown, the National Flood Insurance Program (NFIP) cannot issue new policies, which may delay closings unless private flood insurance is obtained.1
Impact on Existing Mortgages
Federal Employees
If you are a federal employee, your income may be temporarily affected by the shutdown.3 If this impacts your ability to make mortgage payments, we offer alternative payment plans that may help reduce the financial strain. You can learn more about these options in this article.
Social Security and VA Benefits
Programs such as Social Security and VA benefits typically continue to issue payments during a shutdown, but some services may be delayed, which could affect a recipient’s ability to make timely mortgage payments.4
Recommended Steps for Borrowers
- Communicate Early with Your Lender
If you anticipate difficulty making payments, contact your lender as soon as possible. Early outreach allows access to potential forbearance or loan modification programs. - Prepare for Processing Delays
If your loan application involves IRS or other federal verifications, expect longer processing times. Consider building in extra time for purchases or refinances during this period.
Support from Shellpoint
If you have questions about your mortgage or loan application, our team is available to help. Reach out to us for guidance and support during this time.
Fannie Mae® is a registered trademark of the Federal National Mortgage Association. Freddie Mac® is a registered trademark of the Federal Home Loan Mortgage Corporation.
References:
1 Possible Government Shutdown: What You Need to Know
3 What does it mean to be furloughed during a government shutdown?
4 How government shutdown will impact Social Security, SNAP, VA benefits