Friday was supposed to be the day that Keith Morvant sold his home in Greenwell Springs and bought a new house in Central. The partial federal government shutdown halted those plans.
As punishing winds and storms lashed southeastern Louisiana this week, a full contingent of forecasters reported for duty each day to the Nati…
Morvant has an agreement to sell his home for $245,000 to a buyer, who is financing the purchase through a U.S. Department of Agriculture home loan. The buyer's loan was in the pipeline of being approved by the USDA when the shutdown stopped its loan processing on Dec. 22. Because the buyer is being held up, so is Morvant's plan, part of a domino-effect.
“I was going to use the money from this to buy another house,” Morvant said. “That’s all on hold right now.”
Morvant is still living in his original home, where he had started packing for the move. Furniture he ordered for his new home is sitting in a warehouse, waiting to be delivered.
Despite this, Morvant said things could be worse.
“My heart goes out to the people who are being furloughed and not being paid at all with bills still coming in,” he said.
Can't see video below? Click here.
But Morvant echoed President Donald Trump and said the pain of the shutdown is necessary in order to build a wall at the U.S.-Mexican border. “This has been a national security issue for years,” he said. “You’ve got millions of undocumented workers coming across the border. It can’t continue to go on.”
Kenny Hodges, president and chief executive officer for Baton Rouge-based Assurance Financial, said USDA home loans is the primary program being affected by the shutdown. Not being affected are the more often-used conventional loans backed by Fannie Mae and Freddie Mac, as well as federally-backed VA and FHA loans.
Still, the lesser-used USDA loans are popular with first-time buyers because they don’t require a down payment and allow for lower credit scores and income levels compared to other loans. Plus, while the loans are meant to serve rural areas, much of metro Baton Rouge falls under the designation, including all of Ascension and Livingston parishes and southeast Baton Rouge.
“A lot of properties in the heart of Baton Rouge are rural development eligible,” Hodges said.
According to a report from the USDA, between 2009 and 2013 just under 27,500 USDA home loans were funded in Louisiana. That was the fifth-highest total of any state, behind North Carolina, Texas, Michigan and Florida. The value of the loans was pegged at $3.9 billion. Only North Carolina, Texas and Florida did a larger dollar volume during that period.
While the government shutdown is going on, all of the loan applications are piling up at the USDA office where workers have been furloughed. That means once the offices open, there will be a backlog of applications to go through.
The Senate has approved a bill to ensure that all federal employees will be paid retroactively after the partial government shutdown ends.
WASHINGTON — Hundreds of thousands of federal workers weren't paid Friday because of a partial government shutdown, and at least six dozen con…
Because of this backlog, Hodges said he expects there will be a 30- to 45-day delay on processing USDA applications. Normally, it takes between two to four days for employees to sign off on a loan, he said.
“Fortunately, we’re not in the home buying season,” he said. But the longer the shutdown goes on, the more the backlog builds up, meaning there could be delays going into the late spring when more families look at buying houses.
“If the shutdown goes into springtime, it’s really going to hurt,” said Kyle Petersen, a Realtor with Keller Williams in Prairieville. “This is the most utilized 100 percent loan that there is.”
Scott Gaspard, an agent with Re/Max First in Baton Rouge, said the USDA loans make up a small percentage of the financing for home sales in metro Baton Rouge. “I sell over 100 homes a year, and I might do five that are USDA-financed,” he said.
But there are hundreds of homes sold in metro Baton Rouge annually that are financed by the USDA program.
WASHINGTON — The Trump administration has no plans to take money from Louisiana flood control projects to pay for a wall on the U.S.-Mexico bo…
“It’s a good product that has helped a lot of buyers,” Gaspard said. If the program continues to be on hold because of the shutdown, potential homeowners may have to go to FHA loans, which require the buyer to make a down payment that is 3.5 percent of a home’s purchase price. This will force buyers to tap into savings, choose smaller homes or delay purchases, he said.
“I hope things can get resolved and back to normal,” Gaspard said.