Although it’s been a slow recovery, there have been positive signs lately indicating that the housing market has been improving throughout Southwest Florida along with the rest of the country. Builders broke ground on residences at an annual pace of 891,000 in August, up from a low of 478,000 in April 2009. This is still only about two-thirds of the last 20 years’ average rate, however home prices have risen 20 percent since hitting their post recession low in March of 2012.
Many analysts, however, are predicting that the US Government shutdown will immediately begin to delay the approval of thousands of mortgages and mortgage modifications which would have a serious negative impact on housing and the broader economic recovery. One of the main reasons for the delay is that lenders are now blocked from verifying Social Security numbers and accessing Internal Revenue Service tax transcripts. Many lenders rely on Federal agencies such as the IRS in order to verify information they receive from potential applicants. Many lenders also do not approve any loans until they receive necessary tax information from the IRS which is predicted to be delayed due to employee furloughs at the IRS and other Federal agencies.
It is estimated that the partial government closure triggered the furlough of over 800,000 government employees. Hit especially hard by the partial government closure was the Federal Housing Administration and U.S. Department of Agriculture. These two agencies account for about 1 in 4 new mortgages and our now operating with skeleton staffs. Both agencies have already announced that there will be delays in processing new loans. The FHA has also announced that during the shut-down they will no longer process “Title 1” manufactured housing, home improvement loans, and reverse mortgages. Fannie Mae and Freddy Mac should not be impacted as much since they are funded through fees collected from private lenders, not tax payers.
In total it is estimated that the partial shut-down of the government will cost the U.S. about $300 million per day in lost economic output.
Jonathan Bierfeld is an attorney with Martin Law Firm, P.L., whose practice focuses in Bankruptcy Law and Civil Litigation. He is admitted to practice law in the State of Florida and the Federal Court for the Middle District of Florida. He primarily practices in Lee County Florida in Cape Coral and Fort Myers, Florida.