Among the country’s biggest mortgage lenders, some will continue making Federal Housing Administration loans if a government shutdown occurs, while others plan to halt government originations.
The threat that Republicans and Democrats will not agree on a budget has a government shutdown looming.
“We’re now less than 30 hours away from the government shutting down,” President Barack Obama said yesterday. “That means, first of all, 800,000 families — our neighbors, our friends, who are working hard all across the country in a whole variety of functions — they suddenly are not allowed to come to work. It also means that they’re not getting a paycheck.
“That obviously has a tremendous impact.”
Among government agencies impacted is the Department of Housing and Urban Development.
FHA will not endorse any loans in the event of a government shutdown. In addition, no FHA employees will be available to underwrite or approve mortgages.
The scenario is significant given FHA’s market share; out of around $1.5 trillion in U.S. mortgages originated last year, approximately $0.3 trillion was FHA production.
At the nation’s biggest residential lender, Wells Fargo & Co., FHA production — for the most part — will go on, according to spokesman Tom Goyda. He noted that the company has been delegated FHA decision authority, and much of the process is automated.
“We anticipate that, in most cases, we’ll continue to be able to take FHA apps and close loans,” Goyda said in a telephone interview. “There may be certain circumstances, with individual customers, where if their loan requires some actual staff review or approval on anything, that we may run into some … case-by-case issues.”
No. 2 Bank of America Corp. plans to operate on the basis of business as usual.
“Based on our latest information, we expect to continue originating and closing FHA and VA loans in the event of a short-term shutdown of the federal government,” a BofA spokesman said in a statement.
It’s the same story at Citigroup Inc.
“We do not anticipate changes to our mortgage business in case of a government shutdown,” Citi Public Affairs Director Mark Rodgers said in a written statement. “If our government employee customers are experiencing financial difficulty, we will assist them as much as possible, as we do in other exceptional situations.”
But it is a different story at JPMorgan Chase & Co.
The New York-based financial conglomerate does not plan to originate any new FHA loans in the event of a shutdown. However, Chase will close out its pipeline of FHA loans that are already approved.
Jim Olecki, a spokesman for Ally, said that the company is still monitoring the situation.
“If there is any disruption that affects our business, we will communicate to the respective parties as soon as possible,” Olecki explained in a statement.
