Watchdog Report – September 26th


I hope by the time you read this Watchdog Report, you won’t need to read this Watchdog Report.  If no action is taken, the Federal government will shut down on September 30. 

The Federal government has shut down 14 times since 1980.  Most of those were in the 80s, and most shutdowns have only lasted a few days.  But the last shut down, in 2018, lasted 34 days.  When the Federal government shuts down, Realtors and their clients are affected.

In this Watchdog Report, I will outline some of the government programs important to Realtors that will be affected. 

National Federal Flood Insurance Program

As I reported last week, the National Federal Flood Insurance Program authorization expires on September 30 as well.  That means no new flood insurance policies will be written, nor will policies be renewed.  However, existing policies still fall under a 30-day grace period.  If an expired policy is renewed within 30 days of expiration, coverage will not lapse. 

If you have a closing on a home this week that requires flood insurance, you should advise your buyer to secure coverage now.  Note also that according to NAR, most existing policies can be transferred from the seller to the buyer. And one other thing: during a shutdown, Federal regulators will not require flood insurance.  Some banks may require it, but not because of a government mandate.


According to NAR, EPA employees will be furloughed during a government shutdown.  That means that activities like wetland delineations and other permits under the Clean Water Act will be suspended, affecting real estate development.  And agency regulatory activity will pause as well, which means NAR’s lobbying to clarify the new Waters of the US (WOTUS) rule may be delayed as well.

HUD and Housing Programs

According to HUD, FHA will continue to endorse new loans for single-family homes, but not multi-family homes.  However, as with all government agencies operating during a shutdown, approvals may be delayed. 

Fannie and Freddie have continued to operate during past government shutdowns.  Rural Housing Direct Loans will not close, but Guaranteed Loans have closed in the past at the lender’s discretion.  And VA loans have closed in the past but were often delayed by limited staffing.


During past shutdowns, most IRS employees were deemed non-essential, and furloughed.  Only IRS employees who are needed to protect the government will continue to work.  Fannie, Freddie, and FHA may take interim measures for documentation needed from the IRS that may not be available, like tax and social security verifications.

Small Business Administration

During past shutdowns, SBA loan applications were not processed.  However, SBA will continue to process previously approved loans.  They also will issue disaster loans, if necessary, and will process PPP loan forgiveness applications.

Work Visas

EB-5 immigration visas are funded through a different revenue source and will continue to be processed.  However, they are expected to be delayed because the State Department will be shut down.  That means other visa applications, like H-2B, will not be processed.  And if you need a passport, that will be delayed too. 

Will a government shut down affect Realtors?

According to a survey by NAR, 75 percent of Realtors report no impact on their business during a government shutdown.  However, 11 percent report that past shutdowns have impacted them and their clients.  The most common impact was that their client decided not to buy because of economic uncertainty.

RPAC Oyster Roast is October 11

Get involved in government affairs by attending the RPAC Oyster Roast on October 11.  Click here for more information and to buy tickets.  I hope I’ll see you there.

Michael Dey, Director of Government Affairs

Did you know? 13,000 home sales nationally each day require flood insurance.