How Will The Federal Government Shutdown Affect The Housing Market?

There has been a buzz going around that there is a possible federal government shutdown that might affect some of the 4.4 million people that work in this federal government capacity this week. What does the federal government shutdown mean?  This means that the government no longer provides non-essential services. Congress however would like to force the government shutdown on Friday, April 8, 2011 which is a plan to reduce the United States federal budget deficit is not resolved.

If a government shutdown occurs it would affect millions of federal workers and federal agencies which include Environmental Protection Agency, the Smithsonian, a slowing of processing tax returns, and limiting the amount of small business loans.

Even though they are talking of a shutdown on Friday, April 8, 2011, how will this affect people who are interested in buying a home? Well according to Yahoo News website, the article states “The Federal Housing Administration, which guarantees about 30 percent of home mortgages, would stop guaranteeing loans. The issuance of government backed loans to small businesses would be suspended, according to the White House. The Obama administration said the impact on the housing market would be more severe than in 1995, the last time there was a government shutdown. The Federal Housing Administration accounts for 30 percent of the mortgage market, nearly three times the amount 16 years ago”. However, Politico website expressed their views about how the housing market will be affected especially with FHA loans. The Politico website made a couple of interesting points about the housing market which are:

* A shutdown would cause a delay in FHA mortgage applicants looking to close on a home.
* Former FHA administrator Brian Montgomery points out that FHA cannot endorse or insure any loans
* Mortgage loans pay a big factor in the recovering economy.

    Do you have an opinion about this possible shutdown for Friday, April 8, 2011 on the federal government workers? Do you think this is a great or bad idea despite the conditions of the economy? What are your thoughts?

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