Delays in Processing Loans Expected
HUD’s current budgeting resolution expires on March 27, 2013. Due to uncertainty as to the future of the federal budget, HUD has issued certain policy bulletins and statements about firm commitments and staffing furloughs, which are effective immediately.
Impact on Firm Commitments
First, it is important to point out that existing firm commitments will not be affected and will remain intact. However, HUD will be prioritizing which mortgage types are issued firm commitments going forward. It is anticipated that certain types of firm commitments will be delayed until such time as FHA and HUD have new commitment authority.
HUD did confirm that all firm commitments already issued will be honored and may continue to move forward through endorsement/closing. For new loans, HUD will issue firm commitments on a first-come-first-served basis in accordance with the following priorities:
- Priority Projects. These include affordable, RAD projects in Hurricane Sandy-impacted areas.
- Section 223(a)(7) transactions.
- Market rate Section 223(f) and new construction/substantial rehabilitation applications.
Impact on Staff Availability
HUD will also be reducing staff hours as a result of budget cuts associated with sequestration. As of right now, May 10, May 24, June 1, July 5, July 22, August 16 and August 30 will be furlough days for all HUD staff and there will be no communication with HUD staff by phone, e-mail or text on these days. HUD’s offices will be closed to the general public and to HUD employees on these designated furlough days.