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Government-backed mortgages feeling heat from shutdown


Published:   |   Updated: October 11, 2013 at 11:27 AM

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SEBRING - As the government shutdown continued into its second week, some of Realtor Rona Port's buyers who are seeking government-backed mortgages are feeling the heat.

One of her clients is trying to obtain a home loan insured by the Federal Housing Administration but the lender needs a claim number from FHA before a property appraisal can be ordered to close on the loan, and so far they have not had any luck.

"We are stuck," she said, although she has heard the FHA is open. It has been operating with limited staff since the shutdown, media reports say.

Another of her buyers is trying to purchase a short sale with a U.S. Department of Agriculture-backed mortgage, which may be a harder proposition now, since the agency shut down last week.

"We are just waiting for the government to start back up," said Port, of MidFlorida Real Estate Sales. "Several of my clients are affected. In my personal business, one out of five has a government loan."

John Shoop, president of Highlands Independent Bank, said applications and approvals of conventional mortgages are still going through.

What have been affected are USDA-guaranteed loans, he said.

Lower-income home buyers often rely on USDA and FHA loans because of lower down-payment requirements. "Everything else is still active," Shoop said.

How long the partial government shutdown continues remains up in the air.

Facing a fresh deadline, House Speaker John Boehner said Thursday that Republicans would vote to extend the government's ability to borrow money for six weeks - but only if President Barack Obama first agrees to fresh negotiations on spending cuts. Under the Republican plan, the partial government shutdown would continue.

That means, the USDA's anticipated initial citrus forecast, which was supposed to come out today, has been delayed until Obama and congressional leaders resolve their federal budget impasse.

The citrus forecast influences the negotiations between citrus growers and juice processors on farm prices for their fruit, said Highlands County Citrus Growers Association Executive Director Ray Royce.

Some growers have long-term contracts with juice processors, but the citrus forecast, which indicates how much fruit there will likely be out in the market, influences what other growers might get for their fruit and what juice processors might pay for them, he explained.

The delay in the citrus forecast may mean some contracts have to be postponed, Royce said, but so far, the shutdown has not had a big impact on local agriculture.

"It does not affect the ability of the agricultural community to grow citrus, grow vegetables" or herd cattle, he said.

A protracted face-off, though, may start to make dents, especially since the citrus harvest season starts soon.

USDA inspectors, for instance, check on the quality of the fruit and the juice when fruit processing starts, usually from mid November to May and June.

Royce said he does not know what will happen if the standoff continues until then, but guessed, that at that point, USDA staff may be called back to work as "essential" staffers, but emphasized it was just a conjecture.

Locally, the shutdown also has closed down the Sebring office of the Natural Resources Conservation Service, an arm of the USDA, which regulates environmental quality for agricultural operations, among other things.

While Port is keeping her fingers crossed and hoping things get resolved within a week, local dairyman Joe Wright is bracing himself for a long fight.

"I'm not hopeful. I'm not seeing a solution for a couple of months," Wright said. One of the consequences of the shutdown has been the suspension of the National Agriculture Statistics Service.

Farmers and livestock producers use the reports to make decisions - such as how to price crops, which commodities to grow and when to sell them.

"The whole industry relies on it," Wright said. NASS data is used to set the prices of agricultural products - from raw milk to butter.

In the absence of the data, Wright said, prices will be governed by private estimates that may not be a full reflection of the actual demand and supply.

Milk prices, which are determined on a monthly basis, are usually set in the third week of the month for the following month, he said.

Wright also heads the Florida Dairy Co-operative and does not like the mood in Washington right now.

"I blame it on both sides. There is not much reasonableness in the middle," he said. "People in Washington are hunkering down for quite a battle. If we get to December, I would be very concerned."

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