SAN DIEGO – Some folks in the process of buying a home with a federally backed loan are finding themselves out in the cold with the government shutdown.
Thirty to 40 percent of home buyers are first-timers who rely on federally backed loans. If the loans aren’t being processed during the government shutdown the whole rebounding housing market could be jeopardized.
“We had to give our apartment a 30 day notice which we had done,” said Reed. “Then, we found out about this but it was too late – they had already leased out our apartment.”
Reed said they’re paying $400 a week to stay in the hotel along with renting three storage units.
“It’s a tragedy on all fronts,” said real estate expert Ken Kaplan. “All those [loans] that were not actually approved are going to have to be put on the shelf.”
Ninety percent of FHA employees have been furloughed, meaning only a handful of people are processing existing loans and what used to take 30 to 45 days is now taking much longer.
“Now with this, who knows?” said Kaplan. “It could be 65 to 75 days, if not longer- before anyone can get approved.”
For first time buyers and veterans, FHA and VA loans offer a way for them into the rebounding housing market with little down.
According to Kaplan, 30 to 40 percent of the real estate market is first-timer buyers, which could create a domino effect on the larger housing market if those buyers don’t have access to loans.
“This person can’t sell and they can’t go buy something else,” he said.