Under EPA’s shutdown plan, most employees will be furloughed. This will affect various regulatory programs and compliance activities, such as wetlands determinations under the 404 program and enforcement of the lead-based paint disclosure and renovation, repair, and painting programs.

HUD Programs

HUD has a contingency plan that keeps many housing programs alive, though often in a reduced capacity, while others face serious disruption. The Federal Housing Administration, for example, will continue to endorse new single-family mortgage loans, except for certain types, such as HECMs and Title I, thereby keeping its systems running. But many actions needing staff input, such as processing certain types of condominium project approvals, are suspended.

Importantly, borrowers may turn to private flood insurance if the National Flood Insurance Program lapses during the shutdown. The FHA Resource Center remains open for questions, though with limited staff availability, possible longer wait times for assistance, and limited ability to answer case-specific questions.

For housing counseling agencies, services may continue—but only if grant funds have already been awarded and cash flow levels permit. New grants, renewals, or payment draws are paused except in emergencies, meaning some agencies may need to reduce or suspend offerings.

During previous shutdowns, Fannie Mae and Freddie Mac have continued normal operations since they are not reliant on appropriated funds. There are four key areas of consideration:

• Verification of Employment: For homebuyers employed by the federal government, both Fannie Mae and Freddie Mac allow for verification of employment to occur after closing but prior to delivery of the loan.

• Tax Transcripts: Freddie Mac requires all borrowers to sign a 4506T (Request for Transcript of Tax Return) request form prior to close, but the request does not have to be processed prior to close. Fannie Mae requires the same unless the borrower’s income can be verified through Fannie Mae’s proprietary Desktop Underwriter verification system, in which case no 4506T is required. During past government shutdowns, the IRS suspended the issuance of tax return transcripts.

• Verification of Social Security Number: Sometimes, social security numbers are disputed and must be verified. Fannie Mae allowed lenders to verify the numbers prior to delivery in the 2018 shutdown as a precaution but did not allow delivery if the number was not confirmed. Freddie Mac does not require verification of social security number.

• Proof of flood insurance coverage application: Both Freddie Mac and Fannie Mae require a completed application for flood insurance and a copy of a check for the first premium, or the settlement statement reflecting payment of the initial premium, or the assignment of an existing policy from the old owner.