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Tue October 15, 2013
USDA Loan Interruption Hits Local Housing Market
The federal government shutdown is causing a slowdown in home sales in rural Triad communities. The U.S. Department of Agriculture, which is probably best-known for assisting farmers, is also a major provider of loans for low- and middle-income homebuyers. Those loans are targeted for rural communities, but even places in urban counties, including Forsyth and Guilford, have neighborhoods that are eligible for the loans. The problem is that USDA employees have been determined to be “non-essential” government workers, so there is no one at the agency to process the loans. That’s according to Ruth Hudspeth, a regional manager with Fairway Independent Mortgage Association.
“We just have 20-plus borrowers – just at my branch, nationally there’s no telling how many people are affected – just sitting there, who I’m sure have had plans to pack and be moved,” she said. “We’re talking millions of dollars in unclosed loans.”
There are income requirements that go with the USDA loans. Typically that information would come from the department’s Web site,
. But that site has been offline since the shutdown.
Kristina Farrell , president of the Winston-Salem Regional Association of Realtors, said the USDA loan shutdown affects about 10 to 12 percent of local loans. And it comes at a time when the local real-estate market was just showing signs of revival after years of sluggish sales and lost values. The effects aren’t limited to the homebuyer when a purchase is halted, Farrell said.
“Those transactions have been slowed down considerably, if not stopped in a lot cases,” Farrell said. “Which of course affects the sellers as well, because you figure you’ve got the buyer who plans to close on a certain date, now that’s been delayed. You’ve got the seller that possibly bought another house. That’s going to hold up their closing. So it’s going to be like a domino effect.”
Farrell said even if the budget impasse were to end, the breakdown in the USDA process could push homebuyers two months back from when they had expected to close.