Shutdown Leaves Small Mark on Mortgages, Reverse Backlog

The 16-day government shutdown that extended from October 1 through the middle of the month left much of the mortgage market relatively untouched, but several factors have weighed in on the market including a backlog of reverse mortgages that must now be processed by the Department of Housing and Urban Development as well as a swing toward refinances and away from purchase applications. 

Throughout the shutdown, home prices remained relatively stable, according to data compiled by Trulia, with areas that have the most government workers potentially being the most impacted. 

Mortgage applications, in addition, remained almost unchanged following the shutdown, the Mortgage Bankers Association reported Wednesday, but purchase applications fell the week prior by 7% to the lowest level since 2007, according to MBA. 

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Applications fell .6% from a week earlier for the week ending October 18, MBA reported, with the refinance share of the market also remaining stable within 1% of the market share at 65%.

But while forward mortgage lending appears somewhat untouched, the reverse mortgage market will likely experience continued delays for the next month to two months, a HUD official told lenders earlier this week, due to a backlog that formed during the shutdown. 

“We are prioritizing the backlog and will be working to address more critical items within 30 days and then to clear our backlog within 60 days,” HUD’s Charles Coulter said. 

Ginnie Mae continued securitizing loans during the shutdown, and endorsement of forward loans continued under the Federal Housing Administration. 

Written by Elizabeth Ecker 

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