The most recent partial government shutdown lasted less than three full days, but with only a three-week window for Congress to reach a full budget deal, the brief impasse revealed the potential impacts of a longer-term shutdown.
The Department of Housing and Urban Development released an exhaustive document, FHA INFO 18-02, outlining the resources that would continue during a federal work stoppage, along with those that wouldn’t make the cut.
For instance, Home Equity Conversion Mortgage professionals could still receive a Federal Housing Administration case number through the FHA Connection software. The Home Equity Reverse Mortgage Information Technology (HERMIT) system would also remain operational, while borrowers would continue to receive payments and mortgage insurance premium refunds. Additionally, lenders would still be required to submit monthly MIP, as well as upfront mortgage insurance premiums for new endorsements.
But as in previous years, all HECM endorsements would come to a halt for the duration of the shutdown, and HUD and FHA officials warned that substantially reduced staffing levels could create delays with the ongoing functions that survive. Of the 7,797 HUD employees on staff, 289 would have been allowed to report to work, with most of the remainder barred from performing their jobs.
HUD did note that a certain portion of 954 additional employees could be called into work “on an intermittent basis,” but their work would be limited to operations deemed essential and ongoing.
While Ginnie Mae, which oversees the HECM-backed securities (HMBS) marketplace, was also forced to temporarily reduce staffing levels during the brief shutdown, its operations would have gone on largely uninterrupted had the situation gone on for multiple workdays.
“Importantly, Ginnie Mae will continue to remit timely payment of principal and interest to investors,” the government corporation said in a statement released Monday, before Congress struck a temporary deal. “There will also be no disruption of essential functions like the granting of commitment authority and support for continued issuance of Ginnie Mae-guaranteed Mortgage Backed Securities (MBS) and REMICs.”
Of course, the industry could potentially face another shutdown soon: The Senate deal only funds the government through February 8, and the fate of a long-term budget solution remains tied up with the controversial Deferred Action for Childhood Arrivals (DACA) immigration program.
The three-day shutdown of early 2018 pales in comparison to the previous government funding lapse, which lasted from October 1 to October 17, 2013.
Written by Alex Spanko