Government Shutdown Hampers Housing Application

This past week, the federal government faced its first partial shutdown as Congress was unable to come to an agreement and nearly all federal agencies were forced into some form of slowdown or furlough. For the housing market, this partial shutdown may have a more dramatic effect, however it is unlikely to bring the housing market to a halt. Primarily, the impact should be little more than adding a slight delay – a few days on a process that takes many weeks, if not months, to finalize.
While it may seem like the impact is dramatic, in reality it is not halting or damaging home buyers as of yet, but may be an inconvenience as the process is slightly related.

Who Is Impacted?

Anyone going through the process of applying for a loan may face a delay because of the limited functions of the IRS. Any tax related or proof of income documents must be obtained through the IRS, which is facing a slowdown and many employees have been put on furlough. For those well into the mortgage obtainment process, you may have already passed this step and as such will not be effected.

For those who are mid-purchase, there may be a delay in the process. However, since there are many steps to obtaining a mortgage that can run concurrent or in different order, your broker may be able to greatly reduce the impact of the shutdown on your mortgage.

If you are looking to buy a home but have not started the process, there is no reason to hesitate. While your application might begin at a slower pace than usual, there will likely be no overall impact on your application or your chances of securing a new home. Mortgage brokers are still able to help start the process and may be able to get your application all the way through so that by the time documents are requested from the IRS, the impact of the shutdown will be long over.

Will The Shutdown Terminate My Application?

At the moment, there is no sign of this happening, nor is it likely to happen in the future. Banks and investment firms are well aware that the shutdown is a temporary situation and acting rashly will do nothing bet send the market into upheaval. And, as eager as you are to purchase your home, the banks and investment companies are equally as eager to have you as clients and customers.

Will the Shutdown Affect the Market?


While the future is technically anyone’s guess, the market should not be impacted in the long run over the shutdown. While the shutdown is in effect and for a short period following a full reinstatement of employees, the market may be sluggish as brokers and lenders attempt to clear up any and all pending applications. Once the backlog is cleared, the market should remain open and as vigorous as it has been prior to the temporary shutdown