HUD to Lenders: Prepare for Delays, Temporary Closures

As a result of the sequester that will lead to budget cuts faced by government agencies, the Department of Housing and Urban Development is planning for seven days of employee furloughs between May and September 2013.

The department will face closure for those seven days as a result of the sequestration, which requires HUD to reduce its salaries and expenses by $66.6 million.

In a letter to multifamily industry partners sent this week, HUD Commissioner Carol Galante informed lenders there will be delays within the department.

“At this time, the Department of Housing and Urban Development is taking every step to mitigate the effects of these cuts, but based on our analysis, it is likely that your organization’s business processes may be affected,” the letter states. “For example, the sequester will require Department to furlough staff and take reductions for systems maintenance and in other areas which may result in delays in processing mortgage insurance applications.”

The furloughs and other measures could result in delays in loan closings, the letter continues.

While the dates are subject to change based on negotiations with the federal employees union that represents government employees, HUD confirmed the department is tentatively planning to take seven furlough, unpaid days including May 10; May 24; June 14; July 5; July 22; Aug. 16; and Aug. 30.

HUD is also studying its commitments on contracts, equipment, travel and training as a means to reach the required cuts.

Written by Elizabeth Ecker

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