Federal Shutdown May Hurt Local Housing Market
Possible Shutdown May Lessen Loans Through Federal Housing Administration
Posted: 04/08/2011
Last Updated:
776 days ago
The housing market in San Diego could take a bigger hit if the federal government goes through with a shutdown.The Federal Housing Administration, or FHA, insures loans to banks. Those are attractive to first-time buyers because if they qualify, they can get a loan with just 3.5 percent down.Rodrigo Ballon of PrimeLending said the worry is that a shutdown will shut out potential buyers because loans won't be insured and that in turn will drive down sales."People that are in escrow right now or people who are about to pull the trigger to buy a home, they may get the loan but it won't be insured so technically the loan won't be funded," said Ballon.Sixty percent of the loans PrimeLending does are FHA loans."Essentially, the federal government insures the loan to the bank in case the borrower defaults," Ballon said.
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