MortgagePolitics & Money

President Biden, officials and housing groups warn of impending shutdown’s impacts

HUD would have to stop nearly all of its enforcement work fighting housing discrimination, Biden says

With the U.S. House of Representatives Republican majority unable to bring government funding measures to the House floor for a vote, federal officials, lawmakers and agencies are preparing for a federal government shutdown that would take place after current appropriations expire at midnight on September 30.

Organizations including the National Low Income Housing Coalition (NLIHC), the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) have sounded the alarm over the impacts such a shutdown would bring to the U.S. mortgage and housing ecosystems.

Meanwhile, government officials including cabinet secretaries and the President of the United States are also highlighting negative impacts on housing initiatives that would take place should a shutdown occur.

“Just a few months ago, the Speaker of the House and I agreed to spending levels for the government,” President Joe Biden said during an event at the White House on Monday. “We were up right to the very edge, almost reneged on our debt, and [agreed] that we could fund essential priorities and still cut the deficit by $1 trillion over the next decade. Now, a small group of extreme House Republicans don’t want to live up to that deal, and everyone in America could be faced with […] paying the price for that.”

Biden spoke specifically about the impacts a shutdown could have on the Black community, and a shutdown’s negative impacts on housing equality initiatives the administration has prioritized in its housing policy since entering office in 2021.

“For example, a shutdown is going to risk nutrition assistance to nearly 7 million moms and children, and it’s going to disproportionately affect Black families,” Biden said. “The Department of Housing and Urban Development would have to stop nearly all of its enforcement work fighting housing discrimination.”

That same day, U.S. Secretary of Agriculture Tom Vilsack detailed potential impacts on home loans sponsored by the U.S. Department of Agriculture (USDA).

“It’s not just about farm loans. It’s about newlyweds who have decided to purchase their first home in a rural small town,” Vilsack said in the White House briefing room on Monday. “Perhaps they’re getting a loan guarantee from a bank that is guaranteed by USDA or perhaps they’re getting a direct loan from USDA to be able to purchase that home. With a shutdown, those loans don’t take place. And it’s conceivable in those circumstances not only […] are they not able to close the loan, it’s also conceivable that they may lose the deal.”

NLIHC is encouraging those concerned about a shutdown’s impact on low-income renters to use its legislative resource pages to contact their own representatives to discourage a shutdown. At the same time, MBA President and CEO Robert Broeksmit advised MBA members that the association will continue to advocate for a resolution to any impasse that could cause a shutdown.

“Rest assured, we will continue to voice our members’ concerns to key policymakers and staff – in both the Congress and the Biden administration – regarding the detrimental effects of a shutdown of any length,” Broeksmit said in a letter to members on Sunday. “We’ll keep you posted as events unfold and we learn more. In the meantime, we value your questions and concerns as September 30th draws closer.”

Previously, NAR has prepared an FAQ document to advise members of the potential impacts of a related issue, a lapse in the National Flood Insurance Program (NFIP). They specified that a currently debated continuing resolution (CR) that would fund the federal government after September 30 includes an NFIP extension. An NFIP lapse would also have negative effects on the U.S. housing ecosystem.

NAR later updated its members on the wider impacts of a potential shutdown in an email update to its members, including impacts on the Environmental Protection Agency, FHA, Fannie Mae and Freddie Mac, USDA rural housing programs and the Department of Veterans Affairs (VA).

Several agencies have yet to release a contingency plan for a lapse in appropriations as FHA has already done, NAR noted. However, in prior shutdowns the VA maintained its loan guarantee service, it noted.

In addition to impacts on forward mortgage programs, the reverse mortgage industry would be impacted by a shutdown since no new Home Equity Conversion Mortgage (HECM) loans could be endorsed by the Federal Housing Administration (FHA).

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please