With Congress and the White House in a funding stalemate, it is unclear how long the government shutdown will remain in effect. Even a short closure has the potential to affect many of our members.
The U.S. Department of Housing and Urban Development (HUD) has published a Fiscal 2013 Contingency Plan that details which of its programs and activities will be running while the federal government is shut down. Only legally excepted activities (those deemed to preserve life and property) are permitted to continue to operate during a shutdown. HUD offices closed to the general public at midnight on Monday, Sept. 30.
Below is a brief summary of how the shutdown affects key programs at HUD and other federal agencies that are of interest to NAHB members.
Office of Single Family Housing
The Office of Single Family Housing will endorse new loans under current multi-year appropriation authority which allows HUD to carry forward unused commitment authority from FY 2013. New loans will continue to be endorsed as long as FHA does not run out of commitment authority; however, there may be some delays in processing or closing FHA-insured loans.
Total appropriated commitment authority for FHA single family programs for FY 2013 was $400 billion (which HUD estimates can insure 1.2 million mortgages). HUD was not able to tell us prior to the shutdown how much of this commitment authority is available to cover loans during the shutdown until a continuing resolution or new commitment authority is authorized.
· Minimum operations necessary to support FHA’s existing portfolio will include keeping open the FHA Call Center and the National Servicing Center’s Call Center; servicing Secretary-held notes and mortgages; and continuing the REO disposition process.
· The decision to close an FHA loan will be decided by each individual lender.
· Lenders with Lender Insurance (LI) approval may continue to insure loans during the shutdown as long as sufficient commitment authority remains.
· The FHA TOTAL Scorecard will be available to lenders. Lenders can close loans.
Office of Multifamily Housing
FHA multifamily mortgage insurance programs:
Closings on projects with firm commitments that have a scheduled closing during the shutdown period may go forward.
Closings on final endorsements that have critical external deadlines may go forward.
During the first 10 business days:
MAP lenders servicing construction loans may, at their and the owner’s and general contractor’s risk, process interim construction draws. HUD will perform or contract for construction inspections on a post-review basis when the government re-opens. Initial and Final draws will not be processed or approved.
No change orders will be processed or approved.
HUD will continue to collect the mortgage insurance premium (MIP).
No new firm commitments will be issued until additional commitment authority is provided in a CR or appropriations bill.
· Section 8 Project Based Rental Assistance Contracts, rent supplement, Section 236, and PRACs with permanent or indefinite authority or multi-year funding – HUD will make payments only where there is budget authority available from prior appropriations or recaptures.
· HUD will continue to process subsidy payments (HAPs, PRACs) to the extent there are appropriated funds available to make payments.
· HUD will not continue to process requests for contract renewals during the shutdown.
· Approval of emergency repairs will continue.
Physical Property Inspections (Real Estate Assessment Center/REAC)
No REAC inspections may be conducted during a government shutdown, even for inspections already scheduled and confirmed.
The Office of Healthcare Programs will have minimal staff on board to conduct closings of projects with firm commitments for insurance prior to September 30, 2013.
Office of Community Planning and Development (CPD)
CPD will continue to disburse CDBG, HOME and other block grant funds in cases where failure to address issues result in a threat to safety of life and protection of property.
Disaster Recovery Assistance programs funded through multi-year appropriations will continue to operate.
Authorized drawdowns for approved CPD program activities (homeless assistance programs, CDBG, HOME, HOPWA) using pre-FY2014 program funds will continue uninterrupted unless it is necessary for a HUD employee to approve a voucher or lift a system edit prior to a draw down.
There will be limited CPD staff who will continue to disburse CDBG, HOME and other block grant funds that have already been appropriated and competitive funds that have been awarded and are under grant agreement; they will also continue to disburse Disaster Recovery and Neighborhood Stabilization Program (NSP) funds.
Public and Indian Housing (PIH)
Public housing agencies (PHAs) are not part of the federal government and would not have to shut down; however, since HUD provides funds for administration and operations, some PHAs may need to reduce or change their normal operating hours.
HUD would not be able to fund additional payments to PHAs for the Section 8 Housing Choice Voucher program; most PHAs will be able to continue providing rental assistance through the month of October.
U.S. Department of Agriculture (USDA) Rural Development (RD) Programs
Most RD program activities will not continue in the absence of an appropriation. However, there are certain limited activities that are viewed as “excepted” for the purpose of preserving the Government’s property. This property includes RD’s loan portfolio, which exceeds $190 billion and serves as collateral for loans, and borrowers’ funds paid to RD in escrow for real estate taxes and property insurance.
RD will continue to process updates for each RD financial system; will balance and reconcile all RD loans, as well as those Farm Service Agency (FSA) loans on the two financial systems (GLS and PLAS) that are shared between RD and FSA.
Rural Development does have a number of programs that contain broad authorizations under no-year appropriations (i.e., can be used until totally expended) for the Secretary to utilize funds for necessary servicing actions or to make and insure loans and to make grants until the appropriated funds are allocated.
Programs of interest to NAHB that are administered under no-year appropriations include the following: Section 521 Rental Assistance; Section 542 Rural Housing Vouchers; and Single Family Section 502 Guaranteed Loans. However, once these programs run out of their funding, none of them would continue operating in the absence of appropriations except to the extent that servicing actions may be required to preserve the property of Rural Development.
RD did not provide any details on remaining funding for any of these programs. RD did indicate that a prolonged shutdown (more than two weeks) of RD loan and grant making activities would have an immense adverse impact on the rural economy. Should RD not be allowed to continue loan and grant making operations for an extended period, the impact would be substantially more serious.
U.S. Department of Homeland Security
E-Verify, the Internet-based system that allows businesses to determine the eligibility of their employees to work in the U.S., is unavailable due to the government shutdown. While E-Verify is unavailable, employers will not be able to access their E-Verify accounts. For more details on how this could impact your company’s operations, click here.
Small Business Administration
The SBA will not initiate new loan guarantees during the shutdown.
Occupational Safety and Health Administration
With the exception of “imminent danger” to life or property and other emergency situations, OSHA’s investigation and enforcement activities will cease during the shutdown.
Department of Interior
NAHB members who seek permits from the Fish and Wildlife Service could be affected by the federal government closure. When seeking a permit that will impact protected species and their habitat, applicants must comply with the provisions of the Endangered Species Act. New permits or applications currently under review will NOT be processed during the government shutdown, which will increase costs and delays. However, those currently in possession of permits should not be impacted by the government shutdown.
Environmental Protection Agency
Members that file the Clean Water Act National Pollutant Discharge Elimination System permit in states where EPA is the primary permitting authority may notice a delay in issuance of their stormwater permits. These states are Idaho, Massachusetts, New Hampshire and New Mexico, along with the District of Columbia.
Due to the funding lapse, the Energy Star program is shut down until further notice and the processing of all partner applications and partner inquiries has been put on hold. Updates to Energy Star qualified product lists and release of draft Energy Star specifications will also be delayed.
Internal Revenue Service
Some lenders require home borrowers to file IRS form 4506-T to verify the mortgage applicant’s income and Social Security number. With the IRS shut down, this could result in major delays in some mortgage application approvals.
The bottom line: Expect delays for any housing-related federal government programs that are still operating, and plan accordingly.
NAHB continues to closely monitor the situation and we will keep you posted on any new developments.