USDA loans halted due to government shutdown

Published: Oct. 8, 2013 at 10:54 PM CDT|Updated: Dec. 15, 2014 at 3:23 AM CST
Email This Link
Share on Pinterest
Share on LinkedIn

LUBBOCK, TX (KCBD) - The government shutdown is creating real problems for people in rural communities on the South Plains. The shutdown has put a stop on USDA home loans.

"If you were getting a USDA loan, then it is halted," said Senior Loan Officer for Hometrust Mortgage Kimberly Bly. "The government when it shut down, it shut down all USDA loans. There are many loan types that are available, but it is the only loan type that was shut down with the government."

These loans aren't available to just anybody.

"They have to be in rural properties. They do have family income caps that can start at about $75,000 depending on how many kids you have in your family. You cannot currently own a home. You can have owned one in the past and typically the seller is picking up the closing cost," Bly said.

She says the USDA loan is one of the only types left that is a zero down payment for the homeowner, but it takes a while to process. Under normal circumstances, from start to finish, it takes about three weeks. With the government shutdown, that time has increased to around three months, and that's only if a resolution is reached soon.

"I've had one or two customers that were looking at doing USDA loans and I've told them if they want to close by the end of the year they need to do an FHA loan which is a three and a half percent down payment loan."

The problem for the real-estate market in rural South Plains communities is that the lack of these loans will cause a trickle-down effect.

"Realtors won't be selling houses, title companies won't be closing, mortgage offices won't be closing loans and it will have big ramifications especially in small communities around us," Bly said.

Bly says loan payments continue like normal for homeowners who currently have UDSA loans. The USDA doesn't hold the loans, but a worst-case scenario may see them go away indefinitely.

"I guess technically that type of loan could shut down since there is questions over government funding of programs because it is a Department of Agriculture-backed loan."

Copyright 2013 KCBD. All rights reserved.