October 3, 2013
FHA Commissioner Carol Galante issued a statement clarifying some confusion over the FHA’s ability to process new single-family FHA home loan applications during the government shutdown. According to a variety of sources including CNN.com and American Banker, earlier reports from the FHA mistakenly announced the agency would not issue new loans if the government shut down.
Galante issued a statement to clear up the issue, saying, “The HUD Contingency plan posted on Friday mistakenly included incorrect information about a potential shutdown’s impact on the FHA single-family loan program,” HUD said in a statement. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans.”
The original shutdown plan had mistakenly announced, “FHA will be unable to endorse any single-family loans and FHA staff will be unavailable to underwrite and approve new loans”.
That information has since been updated. One HUD official was quoted in the American Banker report as saying, “The HUD Contingency plan posted on Friday mistakenly included incorrect information about a potential shutdown’s impact on the FHA single-family loan program,” noting that new FHA loans processed during the government shutdown may take longer to endorse.
There is no way to predict how long the government shutdown will last or how long it may take the FHA to return to normal-speed operations once the impasse in Washington is settled. Slowing down the processing speed of FHA loan endorsements may create a backlog of cases if the shutdown lasts longer than a few weeks, but there’s no real way to predict what the true impact of reduced staffing might have on the process.
Again, FHA loans WILL be available during the government shutdown–borrowers should give themselves some extra time if paperwork has not yet been submitted, but new FHA loan approvals ARE being made.
Anyone–current or future FHA loan applicants–with questions or concerns about the status of their FHA loan applications should contact their lender directly.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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