Department of Housing and Urban Development
Source: Department of Housing and Urban Development
Tens of thousands of federal workers have lost their work in recent weeks when the Trump administration is trying to reduce government spending.
According to Antonio Gaines, the President of the American Federation of Governation Employites National Council 222, a union that represents the largest number of employees at the Department of Housing and Urban Development, employees of the Federal Housing Administration could be one of the next goals.
It is unclear how many and what kind of workers there is a risk of losing their work in the FHA, an agency under Hud.
“It will not be near 40% to 50% that other program areas experience, but there will be some cuts,” Gaines told CNBC.
The Hud Secretary Scott Turner started a task force from the government agency in February to check HUD's budget and look for ways to reduce expenses.
Bloomberg reported a potential slash of 40% for the main burden of the agency. Hud did not give back the inquiries from CNBC for comments, but Hud officer said Bloomberg that the 40% numbers were “not exactly”.
The White House did not respond to inquiries about comments.
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The FHA is one of the most important government agencies that need low deposit of mortgages for qualified home buyers in the US FHA loans for qualified borrowers, including buyers with low and medium-sized incomes of minority groups.
About 15% of the negotiation sales for homes used in December a FHA loan, which has dropped of around 10% according to Red 202 decade. The increase could be a sign of the competition on the real estate market, which was handled, Chen Zhao, a Redfin economist, recently told CNBC.
According to experts, this could be cut for buyers in the United States in the United States in the United States.
Like fewer FHA employees, buyers can affect buyers
It remains to be seen whether the cuts of FHA employees occur, and to what extent all layoffs should not affect the ability of borrower to receive a FHA loan, said Melissa Cohn, Regional Vice President of William Raveis Mortgage. But you can slow down the process.
“Fewer loans are approved in the same period because only fewer people work on them,” she said.
Ingrid Gould Ellen, professor of urban politics and planning, and director of housing and urban politics at New York University, agreed and said: “I can imagine that the cuts may lead to delays in all phases.”
This could mean that it takes longer to maintain permits or to solve problems between the loan area and the FHA after completing the loan, she said.
“These delays would ultimately lead to higher mortgage costs,” said Gould Ellen, as it will take more time to make a loan and lock an interest rate.
FHA employees usually carry out the applications of borrowers through a model program that determines whether they are approved for a loan, said Richard Green, director and chairman of the Lusk Center for Real Estate at the University of Southern California.
In some cases, the system identifies applicants as “exceptions” or people who have to go through manual underwriting. This can be a “labor -intensive process,” he said.
“For those who have received loans through manual underwriting, I would imagine that it will take longer,” said Green.
With less available employees of FHA employees, third-party providers who, with the processing of FHA loan, could do the task of possibly collecting higher fees to compensate for the additional work, he said.
“The time of people has a value. And if you say loan officer that you have to take more time to make a FHA loan, this is shown in the costs,” said Green.
Higher fees could eat out how much a buyer is able to take. Ultimately, this will continue to burden people who are looking for low payment mortgages because they do not have enough savings to complete the costs in advance.
“Business as usual” for the time being
“As always, it is a business at the moment,” she said.
However, note that all staff cuts could have an impact on how long it takes to get a FHA loan, said Cohn: “Buyers who want to buy today have to take more time to complete the business.”
Slower processing times could make your offer less competitive, especially if sales in your market usually close in shorter periods, she said.
For example, if you buy in a place where it usually takes 30 days for a transaction to be completed, “a seller may not be ready to wait” to get a FHA deal for closing, said Cohn.
If you are a first home buyer on the market, you can benefit from a wide network when looking for mortgage financing. Take a look at the Down payment support programs at the state or local level that can help you to promote more and expand your credit options, explain experts.