What a Government Shutdown Could Mean for Housing

At a Glance:

• As of October 1, a federal government shutdown is underway, prompting operational shifts across housing-related agencies.
• FHA, VA, and USDA loan processing may slow due to reduced staffing at federal agencies.
• Flood insurance interruptions could affect closings in certain regions.
• Fedwire operations will continue uninterrupted, and most conventional loans are expected to proceed without disruption.

As of October 1, the federal government has officially entered a shutdown. While some parts of the mortgage process may experience temporary delays, most closings are expected to proceed as scheduled. Fedwire—the system used to transfer closing funds—remains fully operational and is not affected by the shutdown.

“The systems that support closings, including Fedwire, are functioning normally,” said Robert Odom, President of the Mortgage Division at Ameris Bank. “We want our customers and partners to know that the majority of transactions will continue without disruption.”

Mortgage lenders, title companies, and federal agencies have contingency plans in place to keep transactions moving. Still, borrowers and sellers should be aware of a few areas where delays may occur.

Loan Processing and Verifications

Mortgage approvals often depend on income and identity verification through the IRS and Social Security Administration. If these services are paused or delayed, loan closings may be impacted—especially for borrowers who are self-employed or require additional documentation.

FHA, VA, and USDA Loan Impacts

Loans backed by the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) may face slower processing. These agencies typically operate with reduced staff during a shutdown, which can extend underwriting and approval timelines. 

According to the Mortgage Bankers Association, FHA and VA are expected to continue processing loans during the shutdown, but delays are possible due to limited staffing and reduced access to certain systems.¹

Flood Insurance Considerations

The Mortgage Bankers Association notes that the National Flood Insurance Program (NFIP) is subject to lapse during a shutdown, which could delay closings in areas where flood coverage is required.²

Closings in flood-prone areas could be delayed if required coverage is unavailable. Builders and sellers in affected regions should be aware of potential timing shifts.

Market Data and Confidence

Shutdowns can also delay the release of housing market data from agencies like HUD, the Census Bureau, and Freddie Mac. While this doesn’t directly affect transactions, it may limit visibility into market trends and planning. For example, the Bureau of Labor Statistics has confirmed it will not release the September Employment Situation report if the shutdown continues.

What to Expect

Most conventional loans are expected to proceed without disruption. Lenders and title companies have contingency plans in place, and many automated systems remain operational.

“We’ve seen the industry adapt through past shutdowns,” Odom added. “Our teams are focused on keeping transactions moving and providing clarity where federal services may be temporarily limited.”

Buyers and sellers should stay in close contact with their lender to understand how their specific loan type may be affected.


Sources
^1,2 https://apps.mba.org/pdf/Government%20Shutdown%20Implications%209.29.25_Final_1759166229.pdf

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.