As the federal government shutdown continues, significant impacts are beginning to emerge across key housing agencies and programs. While financial regulators remain fully operational, many housing-related services and federal support systems are slowed or partially suspended, creating uncertainty for lenders, servicers, and consumers.

Financial Regulators: Unaffected by Shutdown

Unlike most federal departments, major financial regulatory bodies do not rely on Congressional appropriations, allowing them to operate normally.

Agency	Operational Status	Funding Source
CFPB	Open, but limited staffing	Funded by Federal Reserve
FDIC	Fully operational	Insurance fund & member fees
Federal Reserve	Fully operational	Independent funding
OCC	Fully operational	Supervision fees
NCUA	Fully operational	Credit union assessments

Although technically open, the CFPB (Consumer Financial Protection Bureau) is operating with reduced staffing, despite being funded independently — a result of internal administrative limitations rather than the shutdown itself.

Regulators Urge Flexibility for Affected Borrowers

Federal banking agencies have encouraged financial institutions to offer relief to borrowers impacted by the shutdown, including:

Fee waivers
Loan modifications
Payment extensions
Short-term bridge loans

Rep. Maxine Waters (D-CA) has also urged regulators to ensure lenders show flexibility, noting the shutdown’s effect on households “through no fault of their own.”

Housing Programs Facing Disruption

While regulators remain stable, housing agencies — especially HUD and USDA — are experiencing program slowdowns. The Mortgage Bankers Association (MBA) outlined the following impacts:

HUD & FHA

Program / Function	Current Status
FHA Single-Family Loans	Continuing – except HECM (reverse mortgage), Title I loans, and any requiring manual underwriting
HECM (Reverse Mortgage)	New endorsements paused
Multifamily Housing	Closings allowed only if Firm Commitments issued prior to shutdown
System Access (FHA Connection, etc.)	Available, but responses requiring HUD staff are delayed
FHA Partial Claims	Continuing
Condo Approvals (DELRAP)	May proceed

Housing Counseling offices are closed, meaning no grant processing or technical support.

VA Home Loan Program

The VA Loan Guarantee Program continues using carryover funds. However, if the shutdown persists, delays in Certificates of Eligibility (COE) and property value determinations may occur — as seen during the 2013 shutdown.

USDA Rural Development (Single-Family Housing)

Most USDA mortgage operations are halted, including loan guarantees and processing. Only limited activities tied to construction draws or foreclosure prevention will continue.

This pause could significantly delay closings in rural housing markets reliant on USDA loan approvals.

Secondary Market Entities – Fannie Mae, Freddie Mac, FHLBs

Fannie Mae, Freddie Mac, and Federal Home Loan Banks remain operational. However, indirect delays may occur if they rely on verifications from affected federal agencies (such as IRS or SSA).

Internal Revenue Service

Income Verification Services (IVES & RIVS) — classified as exempt and remain active
IRS may furlough up to 50% of staff if shutdown continues
Mortgage lenders may face delays in tax transcript requests over time

Social Security Administration

Historically, SSA halts SSN verification services during shutdowns — potentially complicating some mortgage underwriting processes unless eCBSV automation mitigates the impact.

National Flood Insurance Program (NFIP)

The NFIP authorization expired on September 30. While existing policies remain in force:

Impact	Result
New Policies	Cannot be issued during lapse
Renewals/Changes	Restricted
Real Estate Closings	At risk of delay or cancellation

In previous lapses, over 1,400 home sale closings were delayed daily due to lack of flood insurance availability.

Conclusion

Financial markets remain stable due to independent funding of regulatory bodies.
Mortgage originations and closings tied to HUD, USDA, HECM, and flood insurance are at risk of delay.
Lenders should prepare for verification bottlenecks and borrower hardship requests.