The federal government is in a partial shutdown, as Democrats, Republicans and the White House are at an impasse about a line item representing 0.004% of the spending this fiscal year — $5 billion for President Trump’s border wall.

Nine federal departments and several agencies — representing about a quarter of the $1.24 trillion in government spending for fiscal year 2019 — shut down early Dec. 22. The remaining three-quarters of the government, including the Department of Defense, Department of Labor and Health and Human Services, were already funded and won’t be affected by the shutdown.

Government shutdown

Bloomberg News

Federal rules prohibit employees classified as “essential” from taking paid time off, including time for illness, vacation or religious obligations during a shutdown. That includes security staff at airport checkpoints and air traffic controllers. Roads to national parks and campgrounds would remain accessible, but services, such as restrooms and visitors’ centers, would be closed.

Here’s a look at how a lapse in government funding would affect key agencies and federal functions:

Housing and Agriculture

The Department of Housing and Urban Development would continue to make Section 8 housing voucher payments, which assist low-income families. The U.S. Department of Agriculture would continue to inspect meat, poultry and eggs, and its data releases on cotton, dairy, produce and livestock would continue as needed to minimize market disruptions.

New housing voucher requests would not be processed but staff would be available to provide oversight of the program. HUD’s homeless assistance grants, including support for veterans, would continue to operate. Ginnie Mae, a government-owned corporation whose job is making mortgages more affordable, would continue to guarantee mortgage securities.

Transportation

The U.S. Department of Transportation would keep about two-thirds of the department’s more than 50,000 employees on the job, according to its shutdown plan.

Air traffic controllers, critical airline safety inspections and the registration of aircraft would continue to work if a government shutdown occurs, according to a statement by the Federal Aviation Administration. Transportation Security Administration’s airport functions would continue to operate, so air travel would not be affected. The Federal Highway Administration and Federal Motor Carrier Safety Administration, which regulates trucking, would continue their operations. Amtrak would continue its normal operations during a short-term shutdown, according to a spokeswoman for the railroad. Work developing rules for self-driving cars, investigations of vehicle safety defects, crash testing, enforcement efforts and some research projects would be halted at the National Highway Traffic Safety Administration, according to the plan.

Treasury and Trade

The Treasury Department, which includes the Internal Revenue Service, would continue to address any disruptions in the liquidity in the financial system, monitor financial and terrorism intelligence and continue small businesses lending. The U.S. Trade Representative would continue negotiations and enforcement.

The start of the 2019 tax filing season, which will begin at the end of January or early February, won’t be delayed even if the government shuts down, according to Ken Corbin, the commissioner of the IRS’s Wage and Investment division. The agency has yet to announce an official start date. The IRS typically issues refunds within 21 days of the tax return being filed, according to the agency’s website. If the shutdown were to extend into the filing season, or another one were to occur, refunds would be delayed, according to the agency’s shutdown plan. Requests for disaster relief for victims of hurricanes or wildfires would continue to be processed, but audits would be paused.

SEC and CFTC

The Securities and Exchange Commission would halt many of its routine activities and significantly scale back its law enforcement and litigation efforts. The Wall Street regulator would reduce staff to around 300 from over 4,500 normally, according to a plan for a shutdown.

The SEC would continue working only on “emergency enforcement matters” and not open new investigations or exams that can be deferred until the government reopens. The agency would halt processing applications for regulatory exemptions, pause work on ongoing litigation, and generally pause the rule-making process. Searches on its Edgar corporate filing database, which is run by a contractor, would continue to be available. The Commodity Futures Trading Commission, which oversees a chunk of the roughly $500 trillion global derivatives market and trading in Bitcoin futures, will “severely curtail” its operations with a shutdown, the agency said in a memo.

Business & the Economy

The shutdown could postpone the release of several scheduled economic data releases with market-moving potential.

Those wanting to get certain details on the state of the housing market and trade would have to wait until the government reopens: The U.S. Census Bureau would delay all economic releases, which next week include new home sales, merchandise trade and inventories. Agencies not affected by the shutdown — including the Labor Department, Federal Housing Finance Agency, and the regional Federal Reserve banks — would continue releasing data on a regular schedule. That means the markets would still get data on weekly unemployment claims, regional manufacturing surveys and house prices. The independent Energy Information Administration, which publishes projections and reports relied upon by oil traders and energy analysts, was already funded through the fiscal year and wouldn’t be affected by a shutdown. The last major government shutdown in 2013 delayed some releases for more than a month, such as new home sales and housing starts; others were delayed for several weeks, including trade and inflation.

Parks & Public Lands

National Park Service roads, lookouts, trails and open-air memorials generally would remain accessible — just don’t try to use the bathroom or get insight from park rangers. All Smithsonian museums and the National Zoo will remain open with normal hours until Jan. 1.

The park service won’t provide visitor services, including restrooms, collecting trash and plowing roads. Campgrounds, boat ramps and other recreational sites overseen by the Bureau of Land Management would stay open, but restrooms would be locked and water systems would be shut down.

Energy & Environment

Oil, gas and coal companies should see little impact on day-to-day operations, as several federal agencies dip into nonlapsing appropriations and use exemptions to ensure most permits keep flowing and inspectors don’t stop examining drilling rigs and coal mines.

The Bureau of Safety and Environmental Enforcement would keep processing new permits to drill and performing inspections needed to begin drilling. Applications to modify drilling permits would be considered on a case-by-case basis, with the agency focusing on those needed to ensure safe operations. The Bureau of Land Management would keep deploying inspectors to oil and logging facilities on federal land. The BLM also would keep permitting selected energy, minerals, grazing and other activities where it collects a processing fee. Employees focused on the administration and regulation of the Trans-Alaska Pipeline that ferries crude from the North Slope also would stay on the job.

DOJ and Courts

The Department of Justice activities will largely continue uninterrupted during a shutdown since its operations involve protection of life and property. U.S. attorneys will continue their activities without interruption, according to a shutdown plan from the department.

Special Counsel investigations, such Robert Mueller’s probe into the Russian interference into the 2016 presidential election, also wouldn’t be affected because it has permanent, indefinite funding, according to the DOJ plan. The Supreme Court would continue its normal operations and the building will continue to be open to the public during normal business hours. Federal courts could remain open for about three weeks using funds from other sources, but the courts would look for ways to limit expenses, such as cutting travel and training, according to U.S. Courts spokeswoman Jackie Koszczuk.

Foreign Affairs and Homeland Security

Interruptions at the Department of Homeland Security and the State Department would likely be minimal, since most operations and personnel are considered essential.

The vast majority of Customs and Border Protection and Immigration and Customs Enforcement workers would stay on the job if there’s a shutdown. At the Federal Emergency Management Agency, almost 90% of the agency’s more than 20,000 employees are exempt from furlough, according to a contingency plan released in March of this year. Nor would the shutdown halt FEMA’s disaster payments, which go to victims of recent hurricanes, wildfires and other emergencies. Embassies overseas are open in the event of a shutdown. Department guidance from the last time there was a threat of a shutdown, in January 2018, says that consular operations at home and abroad “will remain 100% operational as long as there are sufficient fees to support operations.” The only hitch would be if a passport office is located in a government building that’s closed because of a shutdown, according to the document. Secretary of State Michael Pompeo is still expected to travel to Brazil, where he’ll attend the Jan. 1 inauguration of President-elect Jair Bolsonaro, even if the U.S. government shuts down.

 From Bloomberg News

A great new article by

Andrew Rombach
LendEDU | Content Associate
w: https://lendedu.com/

How to Free Up Cash for a Mortgage Down Payment

Buying a house is a major life step. It can put you on track for having the security of a permanent home and building equity you can tap into later in life. But buying a home is rarely easy. One of the first steps a potential homebuyer has to take is saving up money for the mortgage down payment. And this step is often the most difficult.

While it’s possible to buy a house without a down payment, it’s smart to build one up. You could be turned down for a loan if you don’t have a down payment that’s large enough. The down payment gives banks confidence that you are invested in your home and will work to avoid foreclosure and losses. And the bigger the down payment, the less your monthly mortgage will be.

How to Free Up Cash for the Down Payment

Saving up thousands of dollars for the down payment requires some effort, but it will benefit your long-term financial health. The effort will all seem worthwhile when you spend that first night in your new home. Let’s look at some great ways to save the down payment money you’ll need.

Stick to a Cash Envelope Budget

With the envelope method, you physically handle the funds for your monthly budget. Account for necessary fixed costs such as rent and car payments. Factor in discretionary spending for items such as food, gas, and entertainment.

Once you determine what you’ll allow yourself for discretionary spending for the week or month, take that amount out of your bank and put it inside an envelope. The rest of your paycheck after your fixed expenses are taken care of is then put in your savings.

Every time you spend money for food, gas, or entertainment, you’ll take it from the envelope. When that envelope money is gone for the month, you’re not allowed to spend anything more.

This can be a powerful method because most people have a harder time parting with cash than they do making purchases on credit cards or debit cards. Seeing that cash stack get thinner in your envelope will help curb your desire to spend. The key to this method is willpower.

Consolidate or Refinance Credit Card Debt

If credit card debt is preventing you from saving up for a down payment on a house, consider consolidating or refinancing your credit card debt. You may end up with a lower APR on your debt, which should help you chip away at that debt. With a reduced rate & short repayment plan, you should stand to save some money over repayment. Remember that the point is to get a lower interest rate, or APR.

There are a couple of ways to do this. Opening up a balance transfer card is one method. If you apply for and get the right card, you can transfer your debt to a new card with 0% APR during the first six to eighteen months of opening an account. With a lower rate, you should be able to pay off the debt more effectively. Keep in mind that you must pass a credit check in order to get a card.

The other method is a debt consolidation loan. Here’s how it works. You can take out a personal loan and use it to pay off your credit card debt. You are left with an installment loan as well as a new interest rate and repayment term. Ideally, this loan has a lower interest rate, which is a necessity in order to have a chance to save money. Keep in mind that only the most qualified applicants can secure an ideal low rate.

However, these aren’t instant fix-it solutions. For starters, taking out a new loan to pay off debt or transferring debt doesn’t just make it go away. While that’s obvious, you’re also left with a clean credit card as a result. If you continue to spend frivolously after making one of these moves, then you’ll be back right where you started in no time.

Prioritize Paying Off High-Interest Debt

By focusing on paying off high-interest debt early, called the “debt avalanche” method you can cut back on the interest payments that accumulate and compound. In the long-run, that can save a significant amount of money that you can put toward a mortgage down payment.

Another method is the “debt snowball” method, in which you pay off the debts with the smallest balances first. While this method does not save as much directly, it can provide good motivation to keep paying down your debts.

No matter which strategy you use, by the time your debt is paid off, you’ll be able to progressively save more each month for your house down payment.

The downside to this is that it can take a long time, depending upon how much debt you carry and how motivated you are to paying it off.

Conclusion

Remember that the point of all this is to get ready for a mortgage down payment. Finding ways to pay off debt or save money more effectively is one of the first steps to take if you want to put down enough money for a down payment.


By Andrew, a Content Associate at LendEDU – a consumer education website and financial product marketplace. Andrew has written about various different financial topics over the past few years and has gained quite a bit of experience managing his own debt!

At a Glance:

Paying your mortgage twice a month could be a good idea. After all, you can save on interest and you’ll be free of that big monthly payment sooner. Before you do that, check to see if your lender will allow it and whether it charges fees for processing extra payments or for prepayments.

If you own your home, chances are you’re making a mortgage payment each month. There are ways to pay off your mortgage faster, including making a larger payment or paying more than once per month. And maybe you’d love to get your home paid off faster and save money on interest, but you can’t afford to make larger or more frequent payments.

One method of paying off your mortgage involves dividing your usual monthly payment into twice-monthly payments, so you’re effectively not paying more.

Here’s a closer look at how paying your mortgage twice a month works, whether it can still help you pay off your mortgage early, plus an alternative.

Jump to a section:

Paying Your Mortgage Twice Per Month

You have some options to set up this type of payment. You might be able to do this directly through your lender or by using a third-party bill payment service. You can do it on a schedule that pays twice per month, such as on the 15th and the last day of the month.

Say your mortgage is $2,000 per month. By paying $1,000 twice a month, or 24 times per year, you would make a total of $24,000 in payments – the same as you would if you paid monthly. But when you pay twice per month, you might be able to decrease the amount of debt that accrues interest each month by paying down the principal of the loan faster.

Paying Your Mortgage Every Two Weeks

If you really want to boost your mortgage payoff, consider paying every two weeks. In that case, you’d make $1,000 payments 26 times per year; that adds up to $26,000 by the end of the year. This means you’d be making what amounts to an extra mortgage payment each year.

Paying your mortgage biweekly can help you get ahead on your mortgage. It also means that during two months out of the year you’ll be making 1.5 times your monthly payment, so be sure your budget can handle it. You don’t want to have to raid your emergency savings account or go into credit card debt to cover your other basic living expenses just to pay your mortgage off faster.

Benefits of Paying Your Mortgage More Often

If you can get this system to work for you, not only can you save on interest, but you might also see a bit of a tax break if you claim mortgage interest as a deduction. You should talk to a licensed accountant to see what impact more frequent mortgage payments can have on your tax situation.

And, of course, if you choose to pay every two weeks, you can pay your mortgage off earlier by making an extra full payment per year. Over a 30-year mortgage, that’s 30 extra payments, totaling 2.5 years off the end of your loan.

Potential Issues to Watch Out For

Unfortunately, there are some pitfalls to this plan as well. Depending on the terms of your loan, you could see a prepayment penalty if you pay off your mortgage early. Talk to your lender to see what penalties exist, if any, before you start this plan.

If you use your lender’s payment plan for twice-monthly or biweekly payments and it uses a third-party payment processor, that company may simply hold your payments until it has the full payment to send—essentially defeating the purpose of paying more often. Third-party payment processors might also charge a high fee, which could also eat into your repayment strategy.

Things to Keep in Mind

Remember to check with your mortgage servicer to see whether it offers the option to pay more than once per month and whether it charges any fees to set up additional payments or issues a prepayment fee.

If you can’t set up biweekly or twice-monthly payments, but you can afford to pay a little more each month, consider dividing the amount of your monthly payment by 12 and add that 1/12 amount as an extra payment marked “apply to principal” – if your lender offers this option. This means it can be put toward the principal of the loan and not the compounding interest. At the end of the year, you’ll get credit for a full extra monthly payment, which can reduce your total loan repayment term.

Another great article by the National Mortgage News.

The mortgage industry is calling on the Consumer Financial Protection Bureau to revise its Loan Originator Compensation rule in favor of better protection for consumers and lesser regulatory burdens for lenders.

The Mortgage Bankers Association and nearly a dozen trade groups said that after more than five years under the LO Comp rule, changes to the order should be among the CFPB’s top priorities in its review of the mortgage rules, according to a letter sent to acting CFPB Director Mick Mulvaney.

“The LO Comp rule, while well-intentioned, is causing serious problems for industry and consumers due to its overly strict prohibitions on adjusting compensation and the amorphous definition of what constitutes a ‘proxy’ for a loan’s terms or conditions,” the letter said.

“These harms are felt when borrowers are unable to obtain lower interest rates from their lender of choice when shopping for a mortgage, or when lenders are unable to hold loan officers accountable for errors in the origination process. Consumers are also harmed when lenders limit their participation in special programs designed to serve first-time and low-to-moderate income borrowers,” the groups wrote.

Under the current law, a lender must choose between lowering the interest rate, discount points to match competition and declining to compete with other mortgage offers.

“The requirement to pay the loan originator full compensation for a discounted loan creates a strong economic disincentive for lenders to match interest rates,” the letter said. “For the consumer, the result is a more expensive loan or the inconvenience and expense of switching lenders in the midst of the process.”

Revisions would significantly increase competition in the marketplace, the letter said.

The CFPB should allow lenders to reduce a loan originator’s compensation when the originator makes a mistake, the letter states. Currently, the LO Comp rule does not allow companies to hold employees financially accountable for losses incurring from errors made on a loan.

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September 30, 2018

The rule also prohibits varying compensation for different loan types, including Housing Finance Agency loans. But, lenders should be allowed to adjust loan compensation to offer loans made under state and local HFA programs, the letter argues.

“HFA programs are particularly important for first-time homebuyers and low-to-moderate income families who are often underserved and face affordability constraints under market interest rates and terms,” the trade groups wrote.

Originally, the LO Comp rule was created to protect consumers from steering, which is pretty much a non-issue following newer regulatory actions adopted from the passage of the Dodd-Frank Act, according to the letter. The CFPB’s TILA-RESPA integrated disclosure rule also aimed to provide clarity on mortgage terms and costs by elevating disclosure requirements.

    Good morning, Jodie Tanga here with your Mortgage Minute. Today’s topic, Going Deeper with Your Credit Score Part 2.

    Here are some things you can do now, to start increasing your credit score:
    • Don’t ever make a late payment on your credit cards.
    • Make more than the min payment each month.
    • Try to stay under 30 percent of your credit limit.
    • Be aware of cards that promote low interest rates, keep track of when they are going to increase and any annual fees they may have .
    • Don’t open up too many lines of credit- you don’t want it to appear that you are in need of excess credit.

    Make sure you have at least two lines of credit, you don’t want it to appear you don’t have access to credit.

    For more information on your credit score, call us at the Tanga Mortgage Team powered by Pacific Rim Mortgage at (808) 223-2761 or visit us on the web at www.pacrimmtg.com.