Unless Congress comes up with some fresh cash by midnight Friday, the federal government will shut down — and along with it the Federal Housing Administration and its popular mortgage insurance programs. And an apparent deal to extend government operations would only kick the can down the road for another two weeks.
A shutdown would mean the FHA loan market will grind to an absolute halt, leaving 30% of the residential finance business in tatters.
At press time, it appeared that a budget deal was in place to keep the federal government operating for at least two more weeks, which means new FHA insurance policies are safe during that period of time.
"At the end of that two week period, if there's no new deal we will have to stop issuing policies," a FHA spokesman told National Mortgage News.
He noted that even if FHA has untapped authority, it cannot spend money in the event of a government shutdown.
The FHA single family mortgage is the product of choice for first-time home buyers.
