Government shutdown affecting some Americans’ ability to pay rent, mortgage

Woman looking at her bills while sitting with her laptop open Woman looking at her bills while sitting with her laptop open Image:

As the partial U.S. government shutdown continues, Friday marks the first full pay period when many of the nearly 800,000 federal employees affected by the shutdown will miss a paycheck, leaving some wondering how they’ll afford their next rent or mortgage payment.

The shutdown, now the second-longest in U.S. history, began Dec. 22 after Congress was unable to pass a 2019 budget because of ongoing debate over funding a wall at the U.S.-Mexico border.

Despite multiple meetings between members of Congress and the Trump administration, there is little indication that lawmakers and the White House are nearing an agreement on the budget. The stalemate leaves many government workers living without pay — and some without an ability to pay for housing, according to reports in The Wall Street Journal and CNBC.

The effects of the lingering shutdown have extended beyond federal workers — also stalling the U.S. Department of Agriculture’s home loan program. This affects Americans who don’t necessarily work in the federal government but who want to buy a home through the USDA’s loan program and certain borrowers may not be able to make payments on their accounts.

Some financial institutions are stepping in to help customers facing financial difficulties from the shutdown. The government also has a plan of action designed for shutdown scenarios. Still, with no end to the shutdown in sight, the U.S. housing market as a whole could be affected.

Want to know more?

What’s the background?

The U.S. government shutdown is largely the result of ongoing debate over funding for a wall along the U.S.-Mexico border. Although the House had made progress toward passing a final 2019 budget, the House measure included a higher level of border security funding than the Senate bill, leaving the funding issue unresolved. President Donald Trump, who campaigned in part on a promise to build a wall at the border, was unwilling to sign any budget measure without the $5.6 billion he requested in border security funding.

When the government failed to reach a budget agreement, it prompted the latest partial shutdown. Many federal employees now don’t know when they’ll receive pay or return to work.

Why does this matter?

During the shutdown, 380,000 federal workers have been on unpaid leave while 420,000 have continued working without pay. Friday will mark the first full pay period for many of these workers since the shutdown began, meaning many will now be missing an entire paycheck, affecting their ability to pay bills like rent and mortgage. According to a report by Zillow, unpaid federal workers collectively owe about $438 million in mortgage and rent this month.

In addition to creating uncertainty for federal workers, the shutdown is affecting the U.S. Department of Agriculture’s rural development program. The program assists approved lenders in providing a 90% guarantee for loans to low- and middle-income Americans who are seeking homes in certain rural areas. The longer the shutdown continues, the longer that applications for these loans will be affected, along with certain homeowners’ ability to make payments on their existing accounts.

The government shutdown comes at a time of growing debate about the health of the U.S. economy as a whole, in part because of recent cooling in the housing market. Some data already indicate that uncertainty over the shutdown has slowed mortgage applications. So the longer the shutdown, the greater the risk that the uncertainty will have larger impacts on the U.S. housing market, and the economy as a whole.

What can you do?

Financial institutions such as Navy Federal Credit Union and Wells Fargo have posted online messages to offer assistance and suggest actions customers may take if they’re affected by the government shutdown. For example, Well Fargo says it will consider offering payment assistance for mortgages, credit cards and loans.

Additionally, a recent tweet from the federal Office of Personnel Management provided sample letters that federal workers can use to discuss payment options with landlords and creditors.

With no end to the shutdown in sight, affected workers should plan to reach out to their landlords or mortgage lenders to discuss payment options. Additionally, consider contacting your members of Congress to make your voice heard.

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