The Internal Revenue Service has shuttered most of its operations & furloughed nearly half its workforce as the federal government shutdown continues — a disruption that could slow mortgage processing nationwide, stall income verification requests & add friction to an already fragile housing market.

Roughly 34,000 of the IRS’s 74,000 employees have been placed on unpaid leave after the agency exhausted its contingency funds. According to a statement, “due to the lapse in appropriations, most IRS operations are closed.” About 53% of the agency’s staff — primarily those responsible for safeguarding IT systems & essential taxpayer functions — will remain at work.

For mortgage lenders & servicers, the news immediately raised red flags. Many underwriting processes depend on the IRS’s income verification service & access to Form 4506-C transcripts. With those systems running at limited capacity, lenders could face delays confirming borrower income, verifying employment documentation & completing loan packages.

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One of the pressing issues that mortgage brokers nationwide face is the challenge of housing affordability. All buyers are struggling, but the issue is especially damaging to low-income & first-time homebuyers.

NAMB President Kimber White hopes to have conversations at the congressional & Federal Housing levels to help improve affordability, beginning with loan-level price adjustments (LLPAs). This is where additional charges are added to a loan based on a borrower’s credit score, loan-to-value (LTV) ratio, property type, occupancy status & loan purpose.

“The last FHFA director said to me when we met face to face, ‘Oh, we're doing these loan-level price adjustments because investors & these second home people, they have to have skin in the game, to make skin in the game,’” White recalls. “What you did was take the ability of that first-time buyer, that mom & pop who worked all of their lives to buy a retirement home, out of their hands.

“You're not just getting away from the American Dream. You're getting away from the backbone of the American economy,” he continues. “A home is the biggest builder that someone can have, the biggest source of self-worth. It's going to cause a crisis of lack of fulfillment, self-worth & feeling that they belong.”

Read the rest in NMP magazine.

Home price growth has slowed to its lowest pace in years, according to the latest Cotality Home Price Index. Nationally, prices rose just 1.3% year-over-year, with the median home price dipping slightly to $400,000. While this marks a modest improvement in affordability, the most favorable since 2022, market dynamics remain highly uneven across the country.

The Northeast continues to outpace the rest of the country, with metros like Bridgeport, CT; Newark & Camden, NJ; Rochester, NY; and Chicago, IL leading price growth among the top 100 markets.

“Northeastern states maintain strong housing fundamentals, which has led to continued home price growth in the high single digits,” says Dr. Selma Hepp, chief economist at Cotality.

In contrast, seven of the top 10 metros reporting negative growth were in Florida, with other declines concentrated in Washington D.C., Colorado, Hawaii, Arizona, Texas & California. “Negative home price growth is dominating areas of the South & the West,” Hepp confirms.

Read the rest on MPA Mag.