March 4, 2013
March 1, 2013 was the deadline for passing legislation that would ward off large, across-the-board government spending cuts known as the sequester; the country is now waiting for the effects of sequestration and many FHA borrowers or soon-to-be borrowers are rightly concerned about what might happen to their loan applications.
But at the time of this writing, the FHA and HUD have issued no statements on the FHA official site warning of delays, cutbacks or other issues that might occur because of sequestration. In fact, the official site has been quite silent on the matter–leading many to believe that in spite of budget cuts in other areas, FHA mortgage loan processes may continue unaffected.
One report from the National Association of Realtors official magazine, REALTORMag, agrees. An article titled, “FHA Largely to Be Spared Sequester” says, “Not counting the economic impact on housing demand, the cuts are expected to have minimal impact on federally backed mortgage finance programs because the sequester applies to program dollars, not loan guaranty authority. For that reason, loans backed by the FHA, the VA, and the Rural Housing Service are expected to remain at current levels.”
If that turns out to be true in practice as well as theory, it’s great news for those currently applying for FHA loans and refinance loans. The effects of the sequester won’t be fully understood for some time–some cuts and furloughs are scheduled to start in April rather than immediately, and in at least some sectors there are staggered furloughs in the works to prevent complete service shutdowns.
In the meantime, lawmakers could also pass legislation to under some of the problems created by sequestration or come to an agreement on how to put to an end. By the time this post is live online, could lawmakers have passed something to fix the across-the-board spending cuts and other sequester-related issues? It’s possible. For now, FHA applicants should know there are, at least according to the FHA official site, no announcements of cutbacks or work slowdowns related to FHA loan approvals or related issues.
Do you have questions about FHA 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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