FHA to Guarantee Single Family Loans During Shutdown

American Banker

Oct. 1, 2013

 

WASHINGTON — Carol Galante, the Federal Housing Administration's commissioner, sought to clarify the agency's plans for a government shutdown on Tuesday, emphasizing that it will continue to guarantee single-family loans during the shutdown in contrast to earlier reports.

 

"I do want to clear up any confusion about what this means for FHA single-family home borrowers. FHA will be able to endorse single-family loans during the shutdown," she said at a housing event in Washington hosted by the American Action Forum and the Progressive Policy Institute. "A very limited number of staff will be available to endorse new loans."

 

Confusion over whether the agency would continue to back the loans if the government closed its doors arose after it mistakenly included a note in the "frequently asked questions" section of its shutdown operating plan released on Friday.

 

"FHA will be unable to endorse any single-family loans and FHA staff will be unavailable to underwrite and approve new loans," the agency said on pg. 42 of its plan, though elsewhere in the report the agency did specify that it would be able to endorse the loans during a shutdown.

 

The errant line has since been removed.

 

"The HUD Contingency plan posted on Friday mistakenly included incorrect information about a potential shutdown's impact on the FHA single-family loan program," a HUD official said Tuesday, reiterating Galante's earlier statements that the agency will be endorsing single-family loans during the shutdown.

 

The report adds that loans "may take a little longer to endorse."

 

The shutdown went into effect after midnight on Monday, as Congress failed to reach a deal on the budget for the new fiscal year.