NAR INFORMATION ON GOVERNMENT SHUTDOWN

Marketing (M&M) Contractors managing the
REO portfolio can continue to operate.

 

VA Loan Guaranty Program

Lenders may continue to process and guaranty mortgages through the Loan Guaranty program in the event of
a government shutdown.

 

Internal Revenue Service (IRS)

Should the federal government shut down, the IRS cannot process federal income tax returns or issue refunds
(but it can deposit tax payments). Consumers who were expecting to use their tax returns as part of the down
payment for a home purchase will temporarily not have access to these refunds.

 

Flood Insurance

The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program
(NFIP) will not be impacted by a government shutdown.

 

Rural Housing Programs

For the US Department of Agriculture programs, essential personnel working during a shutdown do not
include field office staff who typically issue conditional commitments, loan note guarantees, and modification
approvals. Thus, lender will not receive approvals during the shutdown. If the lender has already received a
conditional commitment from the Rural Development office, then the lender may proceed to close those loans
during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA
Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the
lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the
lender must wait until funding legislation is enacted before closing a loan.

 

Government Sponsored Enterprises

Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing
Finance Agency.

 

Treasury

No official word as of yet, but the Making Home Affordable program, including HAMP and HAFA, may not be
affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory
spending not discretionary.

 

Background Information on Government Shutdown

 

HJ Res. 48 extends the Continuing Appropriations Act, 2011 (Public Law 112-6) to April 8, 2011. If another
continuing resolution (CR) or budget is not signed into law, the federal government could shut down on April
9, 2011. This requires the furlough of non-emergency personnel and the curtailment of federal agency
activities. Federal contractors cannot be paid. Programs funded by annual appropriations are directly
impacted though programs funded by laws other than appropriations (such as Social Security) may also be
impacted. The last government shutdown occurred during fiscal year (FY) 1996 and lasted 21 days, from
December 16, 1995 through January 6, 1996.

 

The Anti-Deficiency Act is the primary law preventing government activity when no budget or CR is enacted.
The act, found in 31 U.S.C., prohibits:

 

. Making or authorizing an expenditure from, or creating or authorizing an obligation under, any
appropriation or fund in excess of the amount available in the appropriation or fund unless authorized
by law.
. Involving the government in any obligation to pay money before funds have been appropriated, unless
otherwise allowed by law.
. Accepting voluntary services for the United States, or employing personal services not authorized by
law, except in cases of emergency involving the safety of human life or the protection of property.
. Making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of
the amount permitted by agency regulations

 

Basically, the government may not make payments or commitments unless there is enough money in the
bank. According to the US Office of Personnel Management, an agency must shut down activities not excepted
by the US Office of Management and Budget (OMB) when it no longer has the funds to operate. OPM
recommends that agencies 1) communicate with employees and representatives about a potential shutdown,
2) prepare draft furlough notices, and 3) determine which positions are excepted from the furlough according
to OMB guidance.

 

Federal agencies have been required to complete contingency plans since 1980. OMB has three different
bulletins that agencies may reference in the development of their shutdown plans. Plans must include, among
other things, estimated time to complete a shutdown and the number of employees to be excepted. The
President, Members of Congress, presidential appointees, certain legislative branch employees, and federal
excepted employees are not subject to the furlough.