Less than a week after the launch of a working group to “eliminate waste, fraud and abuse” in HUD, it seems that almost half of the Federal Housing Administration (FHA) should be dismissed.
The development of the shock was reported By Bloomberg, based on “two sources” who know the plan.
Last Thursday, secretary Hud Scott Turner revealed plans to reduce the agency, claiming to identify more than $ 260 million in savings, with more to come.
And like the other government services recently affected by layoffs, DOGE also seems to evolve very quickly and aggressively in HUD.
The big question is how dismissals could affect the agency and if they will be recovered if disturbances occur.
FHA layoffs are the last shock of the system
In just under a month, there have been countless government layoffs in many departments, including the Ministry of Energy, the Ministry of Education, EPA, IRS, CDC and well others.
75,000 other government employees have accepted voluntary buyouts as well as the Government Ministry of Effectiveness (DOGE) seeks to reduce spending.
It seems that no section of the government is spared, and the last cuts have shaken the agencies that play a major role in the housing market.
Although it is not clear how many employees will be affected, the parent of FhaThe US Department of Housing and Urban Development, or HUD for short, employs around 9,600 employees, depending on its own website.
Last week, DOGE said that half of HUD workforce was being eliminated. But at the time, the employees of the FHA were not affected by the news.
It seems that things have changed and now almost half of the FHA is also eliminated.
In HUD, there are many departments, including the FHA and Ginnie Mae, the latter which offers guarantees on the titles backed by mortgage (MBS) issues issued by the FHA, VA and USDA.
FHA loans play a huge role in the mortgage market
After the compliant loans supported by Fannie Mae and Freddie Mac, FHA loans are the most common mortgage type available for house buyers today.
And they are particularly important for buyers of minority houses, including black and Latin American borrowers, according to the Urban institute.
So saying that it is a big problem would be a huge and eupheism. The only silver lining, if you could even call it, is that the volume of loans has been very low in recent years.
This means that disturbances could be less of a problem because the staff who remain will have less ready to deal with than in recent years.
After all, with mortgage rates now closer to 7% than 3%, much fewer borrowers refinance their mortgages.
And purchases of houses are also considerably decreasing, with only about four million houses of houses last year in a case of deterioration of affordability.
But if delinquencies become a more important problem in the years to come, there could be increased pressure on the FHA, especially if it is short-clap.
Can I still get an FHA loan?
The short answer is Yesyou can. Although the layoffs seem to be important, I doubt that Doge does everything to compromise your ability to obtain an FHA loan.
As indicated, these are very common types of mortgage loans used by millions to buy a house, thanks in part to their low deposit of 3.5% and to liberal credit rating requirements.
Although the FHA is a government agency, FHA loans are granted by individual banks and mortgage lenders.
A large part of the process is carried out by private sector employees such as loan agents and mortgage brokers who are not employed by the government.
In other words, the federal government does not offer FHA loans, it simply establishes the subscription directives and ensures them once they finance.
Ideally, this means that you should continue to be able to ask for an FHA loan and conclude the loan without emission.
If you are currently obtaining an FHA loan, the same basic justification applies. Your loan will probably continue to move as expected.
However, given the severity of these layoffs, it is not a bad idea to anticipate longer treatment deadlines and plan accordingly.
This could affect the mortgage rate if funding takes more time than expected or if there are other unexpected problems.
Make sure to communicate with your loan agent or your mortgage broker to obtain updates to the state of the FHA system.
Read more: Fha vs conventional loans.
Before creating this site, I worked as account manager for a wholesale mortgage lender in Los Angeles. My practical experience in the early 2000s inspired me to start writing on mortgages 19 years ago to help potential (and existing) buyers better navigate in the mortgage process. Follow me on X for hot catches.