U.S. spending cuts scheduled to kick in today will constrain the availability of Federal Housing Administration mortgages that account for about a quarter of originations, threatening its role in the year-long housing recovery.
Department of Housing and Urban Development cuts will force staff reductions that could slow FHA loan approvals and curtail programs such as foreclosure counseling, according to HUD Secretary Shaun Donovan. If FHA lending drops by the same rate as HUD’s budget, it could shave about 2 percent off U.S. home sales this year.
