Shutdown hits prospective homeowners, renters in Idaho
As the partial government shutdown stretches into its third week, furloughed federal workers and prospective Idaho homeowners in need of help from shuttered agencies are starting to feel the impacts.
Idaho has about 13,300 federal jobs, according to the Idaho Department of Labor, and a Washington Post analysis found that 6,000 of those Idaho employees are either furloughed or working without pay.
Alison Gillespie, president of the Idaho Mortgage Lenders Association, said Idahoans trying to purchase a home with federal assistance through Federal Housing Administration or U.S. Department of Agriculture loans could face difficulties. She said the national Mortgage Lenders Association estimates up to 25 percent of homebuyers in need of financing could be affected nationally, although that percentage may be lower for Idaho.
A Federal Housing Administration loan is a mortgage issued to low- or moderate-income borrowers and insured by the FHA. While the lending program for single-family homes is still running, Gillespie said, any mortgages for Idaho’s limited condo supply will be delayed until after the shutdown.
Similarly, a USDA loan can guarantee a low-interest loan with an approved lender, this time for homeowners in rural areas. When someone is trying to buy a home through that program in places like rural Canyon County, North Idaho, or Valley County, the USDA has to issue a conditional commitment to the approved lender.
The commitment notifies the lender that the USDA has accepted the loan files for review — something Gillespie said is not happening with Rural Development employees furloughed. Lenders can’t do anything without that notification from USDA.
“We can be ready so as soon as USDA is back in place, we can wait for that conditional commitment,” Gillespie said. “But until then, we can’t fund it.”
Leah Marchbanks of Citywide Home Loans has more than 30 years of experience working with homeowners in Canyon County, including those who buy homes insured through USDA’s Rural Development programs. She said they usually get three or four people a month trying to buy a home through the USDA’s programs.
Of course, there’s no word from USDA’s Rural Development department regarding how many Idahoans could be experiencing these problems, as the department is closed for the shutdown.
“We are on furlough due to the lapse in federal government funding,” said the outgoing voicemail message at the Rural Development office in Caldwell. “We look forward to returning your message once funding is restored.”
Rural housing authorities that receive funding from USDA Rural Development — such as Farmway Village in Caldwell — are also affected. Mike Dittenber, executive director of the Caldwell Housing Authority, told the Idaho Press via text message they’re dipping into savings so tenants don’t have to make up the share of rent usually covered by rental assistance subsidies from Rural Development.
“Although our operations will not be affected, our subsidy payments will,” Dittenber told the Idaho Press. “We can last a few months before we will start feeling the pinch.”
Dittenber said the housing authority should be reimbursed once the government starts back up. Still, he’s concerned about the impact on his tenants.
“Many of our tenants also receive food stamps, and we don’t want them to be doubly affected by the feds’ inability to resolve this impact,” Dittenber said. “I think we will all be surprised how many people we know personally will be affected.”
Benefits under the Supplemental Nutrition Assistance Program, also known as food stamps, will be funded through February even if the government shutdown continues, the Associated Press reports. Nearly 40 million Americans use the program.
More problems for federal employees in Idaho
Idahoans working for federal agencies closed during the shutdown may have more problems besides missing paychecks or covering for furloughed co-workers.
If any of those federal employees are trying to close on a home during the shutdown, Gillepsie said they could run into problems finalizing their mortgage agreements when lenders run final employment checks. Most banks require verbal verification of employment from the supervisors or employers of prospective homeowners.
With entire agencies shuttered, lenders can’t verify the employment of federal employees as required. Some lenders are waiving that requirement in light of the shutdown, but not all Idaho lenders are willing to do so.
Marchbanks also believes prospective homeowners could be affected by tax refund delays. Although the Internal Revenue Service assured taxpayers Monday they would still issue refunds during the shutdown, Marchbanks didn’t imagine that happening with “any expediency.”
“Even though they will be processed, they will be delayed, and I think that will affect borrowers, as well. Many borrowers use tax refunds for down payments and closing costs,” Marchbanks said. “Even when the IRS does come back to full operation, I think it’s going to take them some time to catch up.”