On behalf of Chandler and Brown, Ltd. posted in real estate on Thursday, January 17, 2019.
The federal government shutdown has made waves in many different business sectors across the nation, including those in Minnesota. For example, real estate transactions in Minnesota are being impacted by the government shutdown, especially in rural areas. This is because lenders are unable to generate new government-guaranteed mortgages through federal programs.
For example, farmers wishing to purchase property in rural Minnesota may want to obtain financing through a Farm Service Agency loan or a new business may wish to obtain financing guaranteed by the Small Business Administration. However, these buyers cannot obtain such loans until the shutdown ends.
Even lenders in the business of underwriting home loans through the U.S. Department of Agriculture cannot make any sort of conditional commitments during this time. The result is that any loans financed by the USDA have been paused for the time being. According to some resources, one-fifth of mortgages in the state are backed by the federal government. This includes not just USDA loans, but also loans through the Department of Veterans Affairs and loans through the Federal Housing Administration. This leaves some homebuyers unable to complete their real estate transactions while the government is shut down. Thus, existing contracts between lenders, buyers and sellers may be in a position of limbo.
Until the federal governments returns to operations, the real estate sector in Minnesota could continue to be negatively impacted, leaving lenders, buyers and sellers in a precarious position. The long-term impact this shutdown will have on these and other business transactions remains to be seen. If a person is unable to obtain a loan due to the shutdown and this is impacting any real estate contracts they have, they may want to seek legal advice to determine what their rights are.