The Federal government began a shutdown October 1 due to a lapse in appropriations. While the path for reopening remains unclear, if history is any guide, and it may not be this time around, the immediate impact of a federal government shutdown on multifamily industry should be limited.
As the largest providers of multifamily financing, the shutdown will not affect Fannie Mae and Freddie Mac as they are self-funded and do not rely on the federal government to operate.
For programs administered by the Department of Housing and Urban Development (HUD) the shutdown is a mixed bag of outcomes. This link, issued by HUD, provides more information regarding how it will handle the shutdown.
The Federal Housing Administration (FHA) will close multifamily mortgages with firm commitments but will not accept new applications. Other processes may slow based on HUD's staffing decisions.
Section 8 Project-Based Rental Assistance (PBRA) has advanced funding and can operate for as long as those funds last. Previously obligated Housing Choice Vouchers (HCV) will continue to be honored; however, new tenant vouchers will not be issued.
Similarly, the National Flood Insurance Program (NFIP), administered by the Federal Emergency Management Administration (FEMA), cannot sell new or renew insurance policies. However, existing NFIP policies will remain in effect until their expiration dates, and FEMA will continue to pay claims until funds run out. Private-market flood insurance is also an option.
