The government shutdown will immediately stifle approval of thousands of mortgages because lenders cannot access Social Security numbers and tax transcripts. If it lasts longer than a week or two it could dampen the slowly recovering housing market, according to what Mortgage Bankers Association (MBA) CEO David Stevens tells bloomberg.com. “If it’s a short-term shutdown, it’s a story about these employees put out of work. If it’s long term, it’s a broader story about the adverse impact to the economic recovery.” In August 2013 ground was broken on 891,000 residences, still two-thirds short of the past 20 years’ average. Similarly, home prices are 21 percent below their high point in June 2006. Only 67 of FHA’s 2,972 employees are working through the shutdown, and nearly half are dealing with loan endorsements and property preservation. Title 1 manufactured housing, reverse mortgages and home improvement loans will not be processed during the shutdown, which economists estimate will cost the country approximately 0.1 percent in economic growth. A bigger concern would be the inability to raise the debt ceiling: That would cause all U. S. debts to default, and would likely cause mortgage rates to rise sharply, hampering further the housing market, as MHProNews understands.
(Image credit: HousingWire)