October 1, 2013
First-time home buyers in Central Virginia are among the first groups of people who could feel the effects of a federal government shutdown.
"Buyers, sellers, lenders, realtors, attorneys, movers -- everybody is going to be touched by this in some capacity," said Jim Duncan, an associate broker with Nest Realty.
Some government-issued loans are now on hold, as the agencies closed after Congress' failure to reach an agreement on spending bills.
"This is uncharted territory, and it falls in with a recovery that we're all trying to sustain," said Matt Hodges, a loan officer with Presidential Mortgage Group. "Housing recovery, economic recovery. So the fact that this is happening right now is of great concern to us."
Rural development loans come from the U.S. Department of Agriculture. They're geared toward people within a certain income range who don't have to put any money doubt. But USDA employees have been furloughed, and the Internal Revenue Service isn't around to verify information about the borrowers.
The rural development loans can't be processed.
"What that means essentially for new loans and new borrowers and new contracts on homes, those borrowers are not going to be able to finalize their transaction and won't be able to close," Duncan said. "So that's going to impact every facet of real estate."
Given the housing market recovery over the past few years, loans from the Federal Housing Administration will stay put and can be processed.
"It was felt that FHA was important enough in this housing recovery to stay operational," Hodges said.
But in many other aspects, there are still many questions in the home-buying process that remain unanswered.
"We'll know what the impact was when it's over," Duncan said. "But for right now, advising my clients, I think it's going to be advising buyers and sellers to be patient, and hopefully things will be OK."
Duncan said that it's only Day 1 of a government shutdown, many are going to have to read up on information from a variety of sources to determine the best steps to move forward during a rare government shutdown.