There’s a lot of crazy in the air right now, with the impending threat of a United States Government shutdown. Politicians are in a deep, muddy ditch of negative public sentiment, and by the way: when you’re in a hole, you’re supposed to stop digging… Budget fighting is nothing new, but it seems the stakes are growing larger with ballooning federal debt, compounded by increasing fears of rising interest rates. This graphic from Planet Money helps put the dispute in perspective:
There are swelling fears about entitlement costs (crazy infographic on social security from visualeconomics.com).
There is anger over wall street titans getting rich (from Big Picture blog):
About That Shutdown and Mortgages
Anyway, this is a mortgage website. So it’s worth making a quick comment here about what a government shutdown would mean inside this space. The primary concern is with Federal Housing Administration (FHA) lending. FHA is under the US Department of Housing and Urban Development, considered a “non-essential service”, and therefore subject to some “lights out” time. If lenders cannot obtain FHA case numbers from FHA offices (part of the origination process), that will prevent forward progress on FHA transactions. Also, FHA will not be available to issue endorsements and mortgage insurance certificates. Banks seeking to make FHA loans are unlikely to do with a delay/block of this step in the process. Functionally, FHA lending could take a hiatus along with your elected representative. A shutdown in 1995 caused such a disruption with FHA lending, then a much less important sector of the Bay Area real estate marketplace. It won’t crush the marketplace, but it has the potential to stress a few people out.
What’s Changed?
This is a really interesting snippet of an interview of famed economist Milton Friedman by Phil Donahue in 1979. Phil questions the philosophy of capitalism, core to the spirit and foundation of the United States of America. As we sit here approaching 2 and a half centuries as a nation, and our fearless leaders are bickering over ideologies and the near-term direction of our teetering economy, this conversation from a different time and a different social and political and economic context is really, really interesting.
Craziness. It’s in the air today, isn’t it? What do you think about it all? Welcoming (encouraging) comments below…