Property Trax: Federal shutdown threatening local mortgages, rental assistance : Wsj

Property Trax: Federal shutdown threatening local mortgages, rental assistance : Wsj.

rural development division of the U.S. Department of Agriculture, which provide low and even zero interest mortgages to qualified borrowers with low to moderate incomes.

But fewer new loans and delays in loan processing were likely due to dramatically reduced staff as a result of the shutdown, leaving many borrowers in a bind.

At River Valley Bank in Madison, mortgage banker Christa Sweeney said she was handling a USDA rural development loan scheduled to close on Oct. 11.

But with no way of knowing when the shutdown will end, it’s difficult for her to advise her borrower, who must decide if it’s worth the risk.

“We’re waiting for one more thing from (the USDA), but their offices are closed,” Sweeney said. “I just had a conversation with my client, saying there’s a chance you won’t be able to close. That’s the problem – if it opens back up in two days, no problem. If it takes 10 days or more…well, we’re supposed to be closing in 10 days.”

“His answer was that he was going to process it today and decide tomorrow,” she added.

Sweeney also noted lost or delayed mortgages sometimes have a “ricochet effect,” impacting sales and purchases down the line.

“The sellers of the house that my client is buying have an accepted offer on another house, and they won’t be able to buy that if they can’t sell theirs,” she said.

Sweeney shared the email she received from the USDA’s Rural Development division, informing her that many staff would be furloughed pending reinstatement of funding by Congress. Many other federal agencies were sending out similar emails or posting the information on their websites Tuesday.

“Staff will not be available by phone or email, and cannot carry out work for the Agency, until funding is restored,” the message said. “In Rural Development, this means that many services will be delayed or interrupted. For example, Rural Development will not be able to make any new loans or grants; the only exceptions will be for emergency purposes and to protect the Government’s interest.”

 

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