With Congress unable to reach a funding deal, as of October 1, the federal government has shut down. During a government shutdown, many real estate programs are impacted.
Federal agencies are required to implement contingency plans that allow “essential” activities to continue, even if on a limited basis. For California REALTORS®, the most critical housing and mortgage programs—HUD/FHA, VA, and the conforming mortgage guarantors (Fannie Mae and Freddie Mac)—are structured to maintain core functions throughout a shutdown.
For FHA single-family loans, HUD’s plan permits the endorsement of new loans (with the exception of certain programs such as HECMs or Title I). However, activities requiring staff discretion—such as condominium project approvals—are likely to pause or move more slowly. For VA home loans, guarantees remain available and lenders can continue processing applications, but reduced staffing may cause delays in appraisals, certificates of eligibility, and underwriting support. Conforming (GSE-backed) mortgages are generally unaffected since Fannie Mae and Freddie Mac are not subject to annual appropriations, but some services that depend on other federal agencies may be disrupted. In particular, IRS tax transcripts may be unavailable (forcing lenders to close and obtain transcripts later), and employment verification for federal workers may be delayed (though Fannie/Freddie typically allow verification after closing in these cases).
A lapse in the National Flood Insurance Program (NFIP) authority could also prevent the sale of new or renewal policies. Existing NFIP policies remain valid until expiration and claims will continue to be paid while funds last. Policies may also be assigned from seller to buyer during a lapse, and regulators generally provide lenders flexibility. Private flood insurance remains an option.
In short, most routine FHA, VA, and conforming mortgage transactions will continue with limited disruption, but REALTORS® should prepare clients for possible delays where staff approvals or third-party verifications are required. For more detailed information, see NAR’s guide, What a Government Shutdown Means for Real Estate, below.
Congress was unable to reach a funding deal, and as of October 1, the federal government has shut down. During a government shutdown, many real estate programs are impacted, including the National Flood Insurance Program (NFIP).
“According to NAR research, the NFIP supports roughly half a million home sales annually, generating 1 million jobs and contributing $70 billion to the U.S. economy,” said McGahn. “Each day that passes during the shutdown, potential real-life impacts will be felt in America’s housing market, which accounts for nearly 20% of the U.S. economy. That is why NAR urges Congress to reach a funding agreement to reopen the government, while we also continue to advocate for a stable, long-term reauthorization of the NFIP so that families, businesses, and markets can move forward with more certainty.”
NAR has released a memo to members that outlines how key agencies and programs are expected to operate during a shutdown. Click here for the full memo.
With the federal government now in a shutdown, many rental housing providers are asking what this means for federally funded housing programs and for tenants who may be affected. While the situation is dynamic, here is the key information rental housing providers need to know for the time being.
Will Section 8 payments continue?
Yes, for now. The U.S. Department of Housing and Urban Development has already obligated funding that allows public housing authorities to continue operating their tenant-based voucher programs through October, and likely into mid-November. This funding covers the government’s share of the rent for Section 8 voucher recipients.
Several large California housing agencies — including the Sacramento Housing and Redevelopment Agency, Housing Authority of the City of Los Angeles, Fresno Housing Authority, Santa Clara County Housing Authority, and San Diego Housing Commission—have confirmed that the shutdown is not disrupting their immediate operations and that voucher payments are continuing as scheduled.
