Mayor Patterson-Howard’s vision for Mount Vernon and beyond aligns closely with HGAR’s mission—to advocate for strong, vibrant communities where opportunity and homeownership are within reach for all.
HUD has a contingency plan that keeps many housing programs alive, though often in a reduced capacity, while others face serious disruption.
Our industry represents one-fifth of US GDP. It drives economic growth and enables millions of Americans to build intergenerational wealth. However, too many in the industry think they are the economic engine and wealth creator—they aren’t.
HUD has a contingency plan that keeps many housing programs alive, though often in a reduced capacity, while others face serious disruption.
WASHINGTON—The U.S. government shut down early this morning after Congress failed to pass a funding measure, resulting in the likely furlough of thousands of federal workers and the suspension of many key programs, including a host that impact the real estate industry, such as the National Flood Insurance Program.
The NFIP’s authority to issue new policies has lapsed, complicating an estimated 1,400 property transactions each day and leaving many buyers in high-risk areas without flood insurance coverage. Most existing policies remain active, include a 30-day grace period, and can be transferred to new owners. NFIP claims will continue to be paid, but uncertainty grows the longer the shutdown lasts—especially regarding how long buyers may go without coverage and how quickly FEMA’s claims paying funds could be depleted.
“According to NAR research, the NFIP supports roughly half a million home sales annually, generating 1 million jobs and contributing $70 billion to the U.S. economy,” said Shannon McGahn, NAR Executive Vice President and Chief Advocacy Officer: “Each day that passes during the shutdown, potential real-life impacts will be felt in America’s housing market, which accounts for nearly 20% of the U.S. economy. That is why NAR urges Congress to reach a funding agreement to reopen the government, while we also continue to advocate for a stable, long-term reauthorization of the NFIP so that families, businesses, and markets can move forward with more certainty.”
In advance of the shutdown, the National Association of Realtors published an update on the impact a federal government shutdown would have on the real estate industry.
If Congress does not pass funding legislation by September 30, 2025, the federal government will shut down, disrupting many federal operations. A shutdown would affect housing, mortgage, and other programs critical to the real estate industry and could also result in a lapse of authorization for the National Flood Insurance Program (NFIP). Essential services, such as the post office, however, will continue operating.
Given the evolving political environment, NAR staff will closely monitor federal agencies and work with Congress, the Administration, and industry partners to evaluate and address impacts to NAR members and their businesses. The following is a summary of how key agencies and programs are expected to operate during a shutdown.
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 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.
At the same time, essential FHA operations, including paying claims, servicing mortgages, loss mitigation, and managing foreclosed properties (“REO/HUD Homes”) move forward, often via contractors. 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.
Housing Choice Voucher holders can expect Assistance Payments to continue under existing obligations, but additional funding requests or approvals will be delayed. New vouchers may be issued, but extended shutdowns create the risk of cash flow problems for Public Housing Authorities, so landlords and tenants alike are urged to check in with their local PHAs for the latest status.
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.
While the IRS has not yet released its shutdown contingency plan, in past government shutdowns the agency has consistently held that its employees can remain on the job during shutdowns only if their duties protect the government. For example, during the 2018 closure, the roughly 12% of employees who were required to report to work could open mail only in search of checks payable to the government and were not allowed to answer taxpayer phone calls, issue tax refunds, release liens and levies or perform most other taxpayer services.
During a lapse of authority, the NFIP may not sell new or renewal flood insurance policies. Existing NFIP policies will remain in effect until their expiration date, and claims will continue to be paid until funds run out. NFIP policies may be assigned from seller to buyer during a lapse, and most lending regulators have issued guidance providing flexibility. Private market flood insurance is also an option. For more information, please see NAR’s Frequently Asked Questions (FAQs) document on NFIP authorizations.
USDA will not issue new direct loans or guaranteed loans, and scheduled direct loan closings will not take place. Pending conditional commitments for guaranteed loans will be reviewed and, if possible, USDA may issue the loan note guarantee. Guaranteed loan closings without a previously issued guarantee may still proceed, but only at the lender’s risk. Disbursements on existing construction loans may continue when necessary to protect USDA’s property interests. All pending loan servicing actions, including guaranteed loss claims, must be documented and secured to allow for timely processing after the shutdown ends. Rental assistance will continue only if a threat to USDA's property interests becomes imminent (after 30 days), and funding remains available under existing rental assistance agreements.
The Department of Veterans Affairs (VA) will continue to guarantee home loans during a government shutdown, and lenders may keep processing applications. However, some VA staff and support functions may be reduced, which may slow down approvals, appraisals, and certificate of eligibility requests. Veterans seeking a new loan or refinance should check with their lender for updated processing times during an extended shutdown.
During the shutdown, the SBA will not process new loans or approve routine small-business loans, including the CDC 504 Loan Program and the 7(a) Loan Program; however, the agency will continue to close previously approved CDC 504 Loans and carry out limited loan servicing and liquidation activities. The Office of Advocacy will also cease operations. The SBA will continue to issue Disaster Loans should the need arise.
Although the EB-5 Immigrant Investor Regional Center Program receives government funding, its current operations are funded and authorized through September 30, 2027. Due to its reliance on some independent funding sources, the EB-5 Immigrant Investor Regional Center Program will continue to operate during this most recent shutdown. However, application times may be delayed because other agencies, such as the State Department, will shut down and result in staffing shortages and additional delays. Investors may continue to file I-526 petitions and timely responses to USCIS Requests for Evidence (RFE) and Notices of Intent to Deny (NOID). In addition, investors may continue to prepare and file I-829 petitions.
The processing of labor condition applications for various work visas, including the H-2B visa, will be shut down. Similarly, the processing of prevailing wage, labor certification, and other DOL Office of Foreign Labor Certification (OFLC) operations will cease. DOL/OFLC personnel will not be available to respond to inquiries, and web-based systems for filing, status checks, and uploading documents, among other features, will be offline. Deadlines related to DOL applications and procedures are typically modified.
In a previous NAR survey of members on the impact of government shutdowns on their business, 75% had no impact on their contract signings or closings. However, 11% did report an impact on current clients and 11% on potential clients.
If respondents reported an impact on current or potential clients, they were asked for further details. Respondents were allowed to pick multiple responses, as they were working with more than one client. The most common impact, at 25%, was the buyer decided not to buy due to general economic uncertainty, though they were not a federal government employee. Among those impacted by the shutdown, 1% had a closing delay because of a USDA loan.
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