Permanent cuts could disrupt housing finance and delay closings
The Trump administration’s decision to begin laying off federal workers during the ongoing government shutdown has sent shockwaves through the mortgage industry, raising the specter of lasting disruption for lenders, borrowers, and housing markets nationwide.
Russell Vought, director of the White House Office of Management and Budget, announced Friday on an X post that “the RIFs have begun,” referring to reductions in force across federal agencies.
An OMB spokesperson described the layoffs as “substantial,” but declined to specify the number of affected employees or targeted departments.
The move marks a sharp departure from past shutdowns, where furloughs—temporary, unpaid leave—were the norm, and permanent job losses were avoided.
Unions representing government workers swiftly condemned the action and filed lawsuits, arguing that the administration’s approach “strips federal employees of back-pay rights and violates agencies’ statutory duties.”
Everett Kelley, national president of the American Federation of Government Employees, said in a statement, “It is disgraceful that the Trump administration has used the government shutdown as an excuse to illegally fire thousands of workers who provide critical services to communities across the country.”
Mortgage professionals are bracing for the fallout. Agencies such as the Federal Housing Administration (FHA), Department of Housing and Urban Development (HUD), and the Department of Agriculture’s rural housing programs could be forced to scale back or suspend operations, delaying loan endorsements and creating backlogs for lenders relying on federal guarantees.
The White House’s warning that agencies must prepare for mass layoffs if Congress fails to avert a government shutdown next week has set off fresh anxiety across the mortgage and housing industries.https://t.co/eVKK4BwkW1
— Mortgage Professional America Magazine (@MPAMagazineUS) September 25, 2025
Kristi Hardy, executive vice president at Atlantic Coast Mortgage, told Mortgage Professional America, “If the jobs do permanently get taken away, then we are going to have some ripple effects in the housing market.”
She added, “Jobs always drive the housing market. If we have a high unemployment rate, it could affect the market for a while. I don’t think it’s going to be a long-term effect. Ultimately, we are still in somewhat of a housing shortage in the DC metro area. I don’t think the housing prices are going to go down. If anything, they may stay flat or barely move up. But I can definitely see people who are planning to buy holding back and not buying because they’re afraid for their jobs.”
For lenders, even a short interruption could complicate pipeline management and leave borrowers in limbo. First-time homebuyers dependent on FHA or USDA-backed loans could be hit hardest, especially in lower-income communities that rely on federally backed lending and housing assistance.
Beyond immediate operational headaches, analysts warn that the shutdown could undermine investor confidence and add volatility to Treasury and mortgage-backed securities markets, potentially pushing mortgage rates higher.
The political standoff—rooted in disputes over healthcare funding—has left the industry facing yet another period of uncertainty driven by Washington gridlock rather than market fundamentals.
As Hardy put it, “My philosophy is always, stay calm. This too shall pass. I think coming from that calm place is so important as mortgage lenders, because we’re the leaders. We have to guide and lead, not only our clients, but also our realtor partners and our communities.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
