10/01/2025
How Government Shutdown Could Impact Closings
September 30, 2025
The government shutdown could impact the title insurance industry and its ability to facilitate real estate closings. The last and longest government shutdown occurred from December 2018 to January 2019. During this shutdown, closings were disrupted or cancelled due to the inability to obtain lien payoff information from the Internal Revenue Service (IRS).
Here’s a summary of how the federal government shutdown could impact other agencies and programs:
National Flood Insurance Program (NFIP)
The NFIP expired Sept. 30. Since authority lapsed, FEMA cannot issue new or renewal policies until reauthorization; existing policies remain in force for their term and claims may continue from available funds. For real estate transactions in flood zones, a lapse can delay closings unless private flood insurance that meets federal lending and agency requirements is available. ALTA joined 15 other organizations in a letter urging Congress to extend the NFIP before it expired.
Internal Revenue Service (IRS)
Unlike prior shutdowns, Treasury’s IRS FY2026 Lapsed Appropriations Contingency Plan (Sept. 29, 2025) places all 74,299 positions in Category A1 (exempt) and says operations will continue under Inflation Reduction Act funding through 2031. Normal services, including transcript processing, lien certificates/payoffs, estate-tax lien discharges, levies and FIRPTA processing, are expected to proceed.
Federal Housing Administration (FHA)
During previous government shutdowns, the Department of Housing and Urban Development (HUD) enacted contingency plans (not yet available) to allow certain housing programs to continue. During the 2018 shutdown:
FHA endorsed new Single-Family Mortgage Insurance loans, excluding HECMs.
New Multi-Family commitments were not issued.
Lenders obtained FHA case numbers via FHA Connection.
FHA staff were not available to underwrite/approve single-family loans during the lapse.
Department of Veterans Affairs (VA)
The VA continues to guarantee home loans during a shutdown and lenders may keep processing applications, though certain reductions can slow approvals, appraisals, and Certificate of Eligibility requests. During a shutdown, per the Veterans Benefits Administration (VBA) Circular 26-23-17:
Loans are not deemed ineligible for guaranty solely due to a lapse, provided required documentation was obtained before closing.
Department of Agriculture (USDA)
Operating status during a lapse can affect the issuance of new guarantees and the timing of closings for Rural Development (RD)–guaranteed loans. During previous shutdowns, USDA Rural Housing paused issuance of new guarantees, closings depended on pre-lapse obligation status in RD systems, and field office support was limited, leading to processing delays. The USDA posts Lapse in Funding Plans outlining procedures for use in the event of a shutdown. Other resources include:
HB-1-3555 — Single-Family Guaranteed Loan Program Handbook. This sets RD guaranteed-loan policy (eligibility, property/appraisal, closing/escrow docs, post-closing/guarantee processes).
Procedures Notices (PN) — Rural Development directives that update program procedures or handbooks (e.g., HB-1-3555 chapter revisions, form changes, implementation dates). A PN remains in effect until it’s superseded by a later PN or incorporated into HB-1-3555—after incorporation, the handbook controls and the PN serves as a historical reference only.
Administrative Notices (AN) — Rural Development directives that provide time-limited guidance or clarifications (e.g., temporary flexibilities, funding parameters, pilot instructions). Administrative Notices remain in effect until its stated expiration date or until it’s replaced.
