Shutdown leaving USDA loans in limbo

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While some mortgage professionals say it’s business as usual for them through the government shutdown, at least one group of borrowers is being left out in the cold. Those seeking Department of Agriculture loans for rural properties are out of luck until the shutdown ends.

“The big thing (the shutdown) is affecting is that if you’re doing USDA loans, the USDA process is pretty much completely shut down at this point,” United Wholesale Mortgage President Matt Ishbia said Monday.

The USDA loan program provides financing for home purchases or refinancing in USDA-designated rural areas. The loans, backed by the USDA, are serviced by direct lenders. The program includes the option to finance 100% of a home’s purchase price.

But now those applying for USDA loans find themselves in limbo. The USDA has gone almost entirely dark since the government shut down last week; the agency’s web address currently redirects to a page stating that the website is temporarily offline “due to a lapse in federal funding.”

The agency’s shutdown contingency plan, posted on the White House website, states that although the agency will continue “balancing and reconciling” existing loans, “no new (rural development) housing loans or guarantees (will) be issued.”

The contingency plan also warns that a shutdown lasting more than two weeks could have “an immense adverse impact on the rural economy.”

“A more permanent interruption in the program would cause a substantial reduction in housing available in rural areas relative to population,” the plan stated.

COMMENTS
  • Traci on 10/10/2013 2:02:24 PM

    This is absolutely already hurting homebuyers whose files have been submitted to their respective RD offices - because the file is there...but no one is there to review it!!! And when they are allowed to go back to work, you can imagine the backlog and delays...buyers/sellers/realtors/mortgage originators are all affected by this!!! And no new appications for RD mortgages aren't being taken. We can't even check to see if a property is in the "Eligible" areas or the soon to be "Ineligible" areas...oh unless Congress acts to extend the pre-census status a bit longer; and that deadline date has come and gone. But if they do, that's only going to be for a very short term, so once again, the proverbial "can" is being kicked down the road. How many times can this keep going on?

    Our elected President and Congressional Members are "supposed" to be the best and brightest this Country has to help run this Country. They need to start acting like responsible adults and not a bunch of children bickering, arguing, and throwing tantrums until they get their way!! And how shameful that they knew this was coming but have waited so long to act? If the President, the House & Senate all worked for "private" companies...they would have been FIRED a long time ago. Those of us in the real world - the private industry, know that service and performance keep you working and in business; without that you don't survive. Why should those elected officials continue when they don't produce??