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How the Real Estate Biz is Affected by the Shutdown
Real estate-related government programs affected by the shutdown
Flood insurance
A National Flood Insurance Program (NFIP) lapse makes it difficult to close on homes in flood zones if a buyer requires a mortgage because many lenders require NFIP coverage.
Buyers may sometimes “assume” the current policy owned by the seller under certain conditions. For this to work, the seller must have coverage and be willing to transfer it. Check GR 15 in a PDF doc posted online at FEMA’s website for more information. Secondary lenders that purchase mortgages, such as Fannie Mae and Freddie Mac, often issue guidelines on how to handle a flood insurance lapse if a government shutdown appears to last longer than a few days. They may authorize lenders, for example, to approve loans if buyers put money into escrow and sign docs so they can get NFIP coverage as soon after closing as possible. FHA, Fannie Mae, Freddie Mac and VA will likely release guidelines with more information at some point on ways to proceed. During earlier NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve issued informal guidance to lenders. In some earlier NFIP shutdowns, FEMA created a Write-Your-Own (WYO) Program. It then paid private insurance ... more

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