How the government shutdown is disrupting mortgage, real estate transactions

As the U.S. government shutdown continues, federal workers aren't the only ones being impacted. Some homebuyers, along with lenders and real estate agents, might see closings delayed.

A prolonged government shutdown could have far-reaching consequences for a housing market that's already struggling to regain momentum. The uncertainty resulting from the shutdown that began Dec. 21 is already hitting consumer confidence hard, says Lawrence Yun, chief economist with the National Association of Realtors.

"For ordinary Americans, the shutdown adds to economic uncertainty about their future," Yun says. "Buying a home is a high-anxiety transaction, and by adding another complexity to it with possible delays in [the transaction], it hurts the economy and hurts consumers."

Here are some of the ways the government shutdown, which involves an impasse over funding for President Trump's border wall, could impact your real estate transaction.

1. Fannie Mae, Freddie Mac will still process your loan (in most cases)

In general, the shutdown doesn't impact loan processing at these agencies because they're not funded by the government. If you're a federal worker or contractor, though, and your lender cannot get a verbal verification of employment from your federal employer prior to loan delivery, your loan approval may be denied or delayed. Verification of employment is a key requirement to get a loan from Fannie Mae and Freddie Mac, and the agencies cannot buy loans in which a borrower’s employment — and ability to repay — hasn't been fully vetted.

2. FHA loan closings could be delayed, but not VA loans

Historically, loans insured by the Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) are not impacted by government shutdowns. With fewer staff working at FHA, however, some borrowers may see a closing delay due to increased backlog. On the other hand, VA staff who approve VA loans are paid through borrowing fees and typically aren't impacted by a shutdown.

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