The ongoing federal government shutdown could start affecting the US housing market soon.
Federal workers not receiving pay owe $249 million in mortgage payments and $189 million in rent payments this month, according to Zillow.
Some federal housing programs such as Federal Housing Administration loans, Veterans Affairs loans, and USDA loans are experiencing delays.
Additionally, the Department of Housing and Urban Development cannot pay rental assistance to landlords who provide roughly 100,000 low-income Americans with affordable housing.
The ongoing government shutdown looks like it may cause a mess for the US housing market.
As the shutdown enters a record-tying 21st day, a number of worries are piling up, ranging from looming mortgage payments for federal workers to missing rent assistance from the Department of Housing and Urban Development (HUD).
The problems have left workers worried about making ends meet, potential buyers frozen out of loans, and affordable housing experts concerned about evictions.
Missing paychecks mean missed payments
The most direct effect of the government shutdown on the housing market is the increasing possibility that the 800,000 federal workers who are not receiving paychecks during the shutdown are going to face a mortgage or rent bill without any income to pay it.
According to online real estate database firm Zillow, federal workers who are not receiving paychecks have $249 million in mortgage payments and $189 million in rent payments due this month.
Read more: From airport lines to food inspections, here are all the ways the government shutdown is impacting the lives of average Americans
While the Office of Personnel Management released guidance for federal employees who may experience problems, many employees worried that the suggestions — which include writing letters to landlords asking for a delay — are woefully inadequate.
“No payments means no gas for our cars, no money for our prescriptions, our groceries, our rents and our mortgages,” Steve Ching, an electrician who contracts for NASA, told the Washington Post. “We’re all wondering how long our families will be able to hold out.”
Services for homebuyers are experiencing some problems
In addition to the looming payments for federal workers, the federal government has also stopped activities such as loan programs and income checks that people need to buy homes.
While Federal Housing Administration (FHA) and Veterans Affairs (VA) loans are going out during the shutdown, new applicants may experience delays as FHA/VA employees who work on the underwriting process are on furlough, which means they aren’t working.
Additionally, the US Department of Agriculture, which provides loans for people buying homes in rural areas, is not processing those requests.
The IRS is also working through a backlog of income verifications that are needed for some borrowers because the process was paused when the shutdown went into effect, so some buyers may experience delays.
Read more: The government shutdown is in a record-tying 21st day and the fight between Trump and Democrats is only getting uglier. Here’s everything you missed.
These pauses are causing problems for some people trying to buy a new home, according to
Source:: Business Insider