White shocked at continued shutdown, but could a settlement be on the horizon?
Kimber White, the new president of the National Association of Mortgage Brokers (NAMB), was answering questions about the government shutdown during the lead-up to the organization’s recent national event in Las Vegas.
He did not anticipate that more than a month later, he would still be answering questions about the shutdown.
When the clock struck midnight Wednesday morning, the shutdown officially became the longest in US government history. It surpasses the 35-day shutdown from December 22, 2018, to January 25, 2019.
White (pictured top) said he did not expect the government shutdown to last as long as it has. And while there is some optimism that a deal might be reached soon, he is not so sure.
“What I just heard from people on (Capitol) Hill, they're saying, probably about this weekend,” White told Mortgage Professional America. “Yeah, we'll see. I am surprised. But I think, to me, this is the most polarized Congress I've ever seen, and I'm 66. It’s both sides, and I'm very surprised. And I think if it continues, we're going to really see some more effects in housing.”
Risk of long-term effects
Some of the effects of the shutdown might not be realized for a while, according to White. He said some people may be tapping into savings to get by, and that the money might have been earmarked for a down payment on a home.
“I think that we haven't seen the repercussions, and I think it's going to come, even after some of these people go back to work,” White said. “People have been living on money they may have planned to use to buy a house. Maybe they can't afford to buy the house. Maybe they're rethinking buying the house. All of these things are going to affect the long-term.”
The shutdown has already had major effects on the housing market. Because flood insurance cannot be pulled, deals are either held up while the insurance is obtained or private flood insurance is pulled instead, which can add significant cost to a loan.
And while there is a workaround for the flood insurance issue, people in rural areas counting on USDA loans have no recourse at the moment until the government opens up.
“The USDA is dead right now,” White said. “Nothing is getting done with the USDA. With flood insurance, there are workarounds that you know. If you can get a policy written, you can't get the policy endorsed, but there are lenders who will say, ‘Pay for the policy, get a quote.’ Your agent will take it and do it, then we can put it in place.
“That's been happening over the past month, but let's just be honest, that mitigation is going to go away. If it continues for another 30 days, no one is going to sit there for another 30 days and have a chance at a flood risk, not having a policy. That’s great short term, but it's not going to happen long term.”
Rural struggles
LeeCoye “LC” Parker, mortgage broker with C2 Financial, told Mortgage Professional America that he uses USDA for approximately 70 percent of his loans in rural Mississippi.
“That's hurting a lot of rural, first-time homebuyers,” Parker said. “These young families, we don't have an answer for them because of the shutdown. That's impacting my local market, that's impacting my business. I've probably got at least six deals currently that are tied up due to the USDA not being open.
“If I can go USDA, I am going USDA. In my personal opinion, second to a VA loan, the USDA loan is the best product out there, as far as the terms and the 100% financing. It comes with a very competitive rate.”
White said it’s not just in Mississippi where the lack of USDA funding is hurting rural customers.
“There are a lot of rural Florida customers who have been affected by USDA,” White said. “I'm starting to see that it's silently affecting us. I don't think a lot of people are seeing it. For people like me who do business in Florida, Louisiana, rural North Carolina, the rural areas that depend on the USDA, that's bad. They can't get in the house, or they can't refinance their house.”
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In addition, White said Freddie Mac has told them it will pull back funding for certain agencies and nonprofits.
“This whole thing and this whole policy have been an issue,” he said. “We were just told by Freddie Mac that they’re not giving partnerships or any funds for any of our housing agencies, nonprofits, or anything this coming year. That’s the first time in years we haven't had a partnership.
“They want to still do business, and of course, they're going to educate, and we're going to partner with them. But these are the types of things that are being affected, and I think that we have to look at how that’s going to affect things short-term and long-term.”
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