So, with a possible government shutdown on the way I figured I would look into what, if any, effect a shutdown would have on the real estate market. Will it all come to a halt with buyers and sellers unable to start and complete transactions?
Most of the mortgages in the USA are insured, guaranteed or purchased by government or semi-government entities. So, lets look at how those will be affected.
Fannie Mae and Freddie Mac loans will probably be unaffected by a government shutdown as their operating expenses are paid from fees charged their cooperating lenders.
FHA and VA loans will not be affected (contrary to the CNN article) per Federal Housing Administration. It says it “will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market.” During the last shutdown certificates of eligibility for VA loans were delayed though.
Conventional Financing should in theory not be affected as they are generally funded by private banks.
However, some borrowers may be affected nevertheless. Often lenders need to verify employment or income (or verify tax returns with the IRS, particularly if you are self employed.) If you are a federal employee (or need IRS to provide your tax return) those verifications will likely not be possible, resulting in the loan process potentially stalling until the shutdown is over!
So, the impact is varied for borrowers in Northern Virginia depending upon their employment situation. If a shutdown drags on the overall economy in Northern Virginia will certainly take a hit. That will have an adverse effect on the housing market regardless.