The Department of Housing Development released a contingency plan in case budget negotiations fail and the U.S. government is forced to shut down Friday night. According to the plan, it would take roughly four hours for HUD to close its doors and discontinue unnecessary operations. However, emergency activities would continue. Functions funded under multi-year appropriations would carry on as well. Of the 9,700 HUD employees, 876 would remain. “Additionally, during an appropriations hiatus, HUD anticipates that a modest number of employees would be called in on an intermittent basis to work solely on excepted activities,” the federal agency said Friday. Emergency operations at HUD include essential housing and emergency services for the homeless and others who receive assistance under the Office of Community Planning and Development and several others. Funds will continue to be disbursed under the three rounds of the Neighborhood Stabilization Program, which provides funding to local governments and nonprofits to buy, renovate and resell previously foreclosed homes. As for the Federal Housing Administration, new loans will not be endorsed as analysts expected, and only operations necessary to maintain its existing portfolio will carry on, including maintenance of its inventory of previously foreclosed homes, or REO. There also is more commitments the FHA will continue for its multi-family portfolio. Closing on projects scheduled during the shut down would take place, as well as closings on final endorsements. HUD will contract for construction inspections on a post-review basis when the government re-opens. The role of Ginnie Mae, which ensures the payment of principal and interest on FHA loans pooled into securities, is considered vital to the stability and liquidity of the primary mortgage market. Therefore, Ginnie Mae will continue to run. “An interruption in the operations would create immediate and significant market disruption that would lead to financial losses for investors and increased mortgage rates for government-insured mortgage loans,” HUD said in the plan. The Washington Post reported lawmakers came close to a deal at 3 a.m. Friday morning, but talks broke down once again. No deal has been struck as of lunchtime Friday. Write to Jon Prior. Follow him on Twitter @JonAPrior.

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