THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, November 15, 1995 TAG: 9511150264
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Medium: 65 lines
Truck drivers Tracy Spurlock and Shirley Loudermilk always hoped to move out of their truck and onto firm ground - specifically into their own house.
They're still waiting.
Thanks to the federal shutdown caused by a budget resolution standoff Tuesday between President Clinton and the Republicans in Congress, Spurlock and Loudermilk can't close on the Virginia Beach house they're buying.
They have an FHA loan. The paperwork is processed by a federal agency that is out of business until the issue is resolved.
``It's extremely frustrating,'' said Loudermilk, 50, who was staying in a local motel and waiting to drive a load to California. ``You think the government is there for major issues. You don't realize they affect every single thing you do. It's very, very frustrating. Everything we do has to be put on hold.''
Other people taking out Federal Housing Administration loans or Veterans Administration loans are facing the same situation.
Because nonessential employees have been placed on furlough, the Department of Housing and Urban Development - which administers FHA loans - and the Veterans Administration cannot process loans. The two federal agencies guarantee home mortgage loans so moderate- and low-income families can buy houses.
The federal government shutdown has paralyzed much of the residential real estate market in Hampton Roads, where federally guaranteed loans are about 75 percent of the region's home sales, said Bob Schaefer, owner of the realty firm Century 21 at the Mall in Virginia Beach.
George Frates, a Century 21 agent, said, ``Realtors, builders, insurance companies can't get paid on homeowner policies, attorneys, banks - it's pretty far-reaching, and that's just the initial portions. It's pretty major.''
The FHA, for example, processes about 2,500 home-purchase loans and mortgage refinancings a day in the United States.
``This is really throwing us out of synch,'' said Win Brown, a loan officer at First Home Mortgage in Virginia Beach. Federally guaranteed loans ``are 95 percent of my business.''
``It's not that there isn't conventional (loan) business. There's so much more government loans in this area because of the military.''
Home buyers can lose their ``locked in'' mortgage rates if the rates expire before the government can process the loan applications. Mortgage bankers cannot send investors the certificate authorizing the loan. Real estate agents cannot get paid until a house is sold. The workload will be doubled when lenders resume processing the backlog of loans.
``In real estate, you anticipate all kinds of problems, but you don't anticipate the government going out of business,'' Frates said.
Spurlock couldn't agree more.
He and his wife had planned to close on their house Tuesday because they needed to leave today for a six-day trip to haul military equipment to San Diego.
``Buying a house, at this point in my life, was a major achievement,'' said the 30-year-old Alabama native. ``I've worked so hard to catch up to my peers; this is a major set-back. Every day we don't move into the house is costing me money.''
KEYWORDS: FEDERAL GOVERNMENT BUDGET SHUTDOWN by CNB