What is Happening in the Mortgage Market

As many of you know, each year Congress must appropriate funds for the Guaranteed Rural Housing Program (USDA Mortgages) before the new fiscal year which is October 1st. Over this past month, my mortgage company has been diligently reaching out to our investors and USDA for guidance for this next year – unfortunately not much had been provided for anyone. Because of this and from the several we have spoken with, we all suspect there may be a delay in receiving conditional commitments from USDA effective 10/1/11.

Assuming Congress passes legislation currently under consideration to keep the federal government fully functional, a number of days will be required to set up the authorized allocation for distribution. USDA cannot predict when it will be able to resume approving loans and issuing Conditional Commitments. If this is the case, Conditional Commitments will not be issued “subject to funding” as they were in past years, which allowed us to continue closing USDA loans during this time.Delays in approvals and closings should be expected if this were to occur. Despite numerous attempts, we have been unable to get any clarification from USDA directly or obtain additional information from our investors. USDA has not released any communication regarding this issue.

Legislative Update:We reached out to the office of the appropriations sub-committee who obtains funding authorization for the Section 502 USDA Rural Housing Program, and the message was that through a continuing resolution the government is able to continue to operate and fund through next Tuesday October 4th. At this time there is an informal agreement by the House to a continuing resolution for the funding of programs through November 18, 2011.

The House of Representatives will reconvene on Monday October 3rd to vote on the November 18th extension, most likely through an amendment to H.R. 260 Continuing Appropriation Act, 2012. Essentially a continuing resolution allows the government to continue to fund government agencies if a formal appropriations bill has not been signed into law. This is a common used legislation vehicle in past fiscal years.

At this point, we do not have any additional tangible evidence from our investors or USDA on whether or not conditional commitments will continue to be issued after October 1st. Please know that we are staying on top of this situation and will update you the moment we have additional information. This is a situation that will affect all lenders, not just my company Envoy Mortgage.

Bottom Line:If you are a buyer or seller that your buyers is utilizing a USDA mortgage you may experience delays until Congress acts. I would suggest you call your lender to discuss thier plan of action.

If you would like my information about USDA mortgages feel free to call me or visit my website.