Rate-indicative yields dive as partisan war ignites shutdown

Core Insights - A government shutdown has occurred due to partisan budget negotiations, impacting bond investor activity and potentially lowering mortgage rates while challenging the housing market [1] - The 10-year yield, which correlates with common mortgage types, decreased to 4.1% from 4.15%, influenced by a slow private payroll report [2] - Experts warn that prolonged shutdowns could raise concerns about U.S. debt credit quality, leading to higher bond yields and mortgage rates [3] Government Sponsored Enterprises (GSEs) - Fannie Mae and Freddie Mac have implemented workarounds for borrower data verifications, allowing for flexibility in the mortgage process during the shutdown [3][4] - These GSEs are also permitting servicers to extend forbearance to borrowers affected by the shutdown [4] Federal Housing Administration (FHA) - The FHA's Office of Single Family Housing announced limited operational capacity for some mortgage insurance programs during the shutdown [5] - The FHA's operational decisions are guided by legal frameworks established by the U.S. Constitution and other statutory provisions [6] Flood Insurance and Lending - The American Land Title Association highlighted the lack of authorization for federal flood insurance, which affects millions of Americans and jeopardizes home sales [6] - Regulatory agencies have re-released guidance allowing lenders to continue making loans subject to federal flood insurance statutes, even when the National Flood Insurance Program is unavailable [6][7] - Lenders are advised to evaluate safety and soundness and manage legal risks during the shutdown period [7]