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It’s looking more likely that there will be a government shutdown beginning October 1st, which begs the question, what happens to mortgage rates?Do they go up even more, do they fall, or do they do nothing at all?At first glance, you might think that they’d rise because of the uncertainty involved with a shutdown.After all, if no one is quite sure of the outcome, or duration, banks and lenders might price their rates defensively.That way they don’t get burned if rates shoot higher. But history seems to tell a different story.Bond Yields Tend to Fall During Government ShutdownsAs a quick refresher, mortgage rates track 10-year bond yields pretty consistently. So if the 10-year yield falls, long-term 30-year fixed rates often fall as well.Conversely, if 10-year yields rise, which they have quite a bit lately, mortgage rates also increase.The 10-year yield began 2022 at around 1.80 and is around 4.60 today. Since that time, the 30-year fixed has climbed from roughly 3% to 7.5%.So there’s a pretty strong correlation between the two, though the spread between them has widened over the past couple years as well.Since mortgage bonds are inherently riskier than government bonds, there’s a premium, or spread that must be paid to investors.You used to be able to price the 30-year fixed mortgage at about 170 basis points above the 10-year yield. Today it might be closer to 275 bps or even more.Anyway, the 10-year yield seems to fall during government shutdowns because of the old flight to safety.And here’s what Morgan Stanley had to say on the matter: “On average, during shutdowns since 1976, the 10-year Treasury yield has fallen 0.59% while its price has ticked up, suggesting that investors favor the safe-haven asset during these periods of uncertainty.”In other words, if the 10-year yield falls during the shutdown, 30-year mortgage rates should also drift lower.How much lower is another question, but if they continue to track the 10-year yields, a .50 drop in Treasuries might result in a .25% drop in mortgage rates.Did Mortgage Rates Fall During Prior Government Shutdowns?Now let’s look at some data to see if mortgage rates actually fall when the government shuts down.The most recent government shutdown took place from December 21st, 2018 until January 25th, 2019.It was the longest shutdown in history, lasting 34 days. There was one in early 2018, but it only lasted two days.I did a little research using Freddie Mac mortgage rate data and found that the 30-year fixed averaged 4.62% during the week ending December 20th, 2018.And it averaged 4.46% during the week ending January 31st, 2019.Of course, the shutdown drama started earlier in the month of December 2018 when the 30-year fixed was priced closer to 4.75%.So if we factor all that in, you might be looking at a 30-basis point improvement in mortgage rates.Prior to that shutdown was the one that occurred on September 30th, 2013 and lasted 16 days.The 30-year fixed averaged 4.32% during the week ending September 26th, 2013, and fell to 4.28% during the week ending October 17th, 2013.Not much movement there, but it did continue to drift lower in following weeks and ended October at 4.10%.You then need to go all the way back to December 15th, 1995 to get another shutdown, which took place under President Clinton.It lasted 21 days, ending during the first week of 1996. During that time, the 30-year fixed fell from around 7.15% to 7.02%, per Freddie Mac.Prior to these shutdowns, most only lasted a few days and thus probably didn’t have much of an impact, at least directly.All in all, mortgage rates did improve each time, though not necessarily by a huge margin. Still, any .125% or .25% improvement in pricing is welcomed right now.A Lack of Data Makes It a Guessing GameIf the government does in fact shut down this coming week, it’ll mean that certain data reports won’t get released.This means we won’t see the Employment Situation, scheduled for next Friday, nor will we see CPI report the following week.There are many other reports that also won’t be released between this time and beyond, depending on how long the shutdown goes on.As such, we’ll all be flying in the dark in terms of knowing the state of the economy. And the direction of inflation, which has been top of mind lately.The good news is the Fed’s preferred inflation gauge, the personal consumption expenditures price index (PCE), already came out.And it was weaker than expected. Prior to that report, we were getting some signs that the economy was still running too hot.So the timing might work here in terms of higher bond prices and lower yields, which in turn would drive mortgage rates down too.After all, our last piece of information was that inflation and consumer spending rose less than expected, which is good for rates.Read more: How the Government Shutdown Affects Various Types of Mortgages

Artificial intelligence could help lenders navigate secondary market underwriting guidelines, but only if it is in line with the latest guidance from regulators.Developments like the Consumer Financial Protection Bureau's recent directive on artificial intelligence and denials do signal renewed regulatory scrutiny in this area, Frank Poiesz, business strategy director, Dark Matter, told attendees at Digital Mortgage 2023 this week.Regulators "are very concerned and are going to track closely how credit decisions are made," Poiesz said.CFPB guidance on chatbots, in addition to the directive on denials, have made vendors cautious, and "that's why I feel that we're kind of at a point where we've got to watch how we use AI as an industry," he said while speaking on a conference panel about its role in underwriting. Leah Price, an independent fintech advisor, left, discussed the role of AI in underwriting with Dark Matter Business Strategy Director Frank Poiesz and NMN Reporter Maria Volkova at the National Mortgage News Digital Mortgage Conference on September 26 at the Wynn Resort in Las Vegas. Photo credit: Jacob Kepler But while this may make the industry move a little more deliberately when it comes to development and use of the technology, it hasn't stopped progress altogether."There are a ton of applications we're working on that include helping the people that have to understand the seller guides," said Poeisz, referring to rules government-related loan buyers set for lenders. "That knowledge to users is certainly a good application of generative AI."Other underwriting-related technologies that are moving forward with some regulatory scrutiny include digital bank and rent data that can serve as an alternative way to qualify borrowers who lack traditional credit histories.Oversight agencies are very protective of the use of this consumer-permissioned data. Stakeholders participating in the Federal Housing Finance Agency's TechSprint discussions in July told the agency they see a utility model as one potential long-term outcome.There is room to move within the rules in this area, Lucky Sandhu, president and CEO of Reliance Financial, told conference attendees while speaking on a panel about alternative credit's potential to grow loan pipelines."Regulators will work with you as long as you understand the foundation and fundamentals very, very strongly, especially when it comes to understanding credit defaults and credit risk," Sandhu said.Alternative credit's potential reach is sizable, said David Battany, executive vice president, capital markets, Guild Mortgage, citing Consumer Financial Protection Bureau data indicating over 50 million adults have insufficient or no traditional credit history.While alternative credit has long existed, it's been unwieldy to use, with few people willing to go through a process, he noted. But digital advances in consumer-permissioned bank and rent data at government-sponsored enterprises Fannie Mae and Freddie Mac are improving access."The GSEs have really taken the lead on this. Also the private market —  the non QM market  — has really innovated in a lot of areas," Battany said. Digital tax-transcript data in particular has been used to qualify self-employed borrowers for the latter product.While conforming lenders are able underwrite self-employed borrowers, the loans have restrictions. That ends up pushing many into non-qualified mortgage products where lenders have less assurance of compliance with the Consumer Financial Protection Bureau's ability-to-repay rules.While the enterprises have offered lenders limited relief from representation and warranty risk when digital data validates information on loans submitted for sale in some cases, Fannie has warned whether the information is ATR compliant is a separate question.And the number of alternative credit borrowers making it through into the GSE market has been limited, according to both Battany and another panelist, Patrick Tadie, executive vice president, global capital markets, structured finance, at Wilmington TrustOne hurdle to the use of alternative credit data by the private credit market is that the rating agencies that have a hand in secondary market pricing consider it to be limited given the small amount of loans originated and their performance track record."We still need more data," said Tadie, noting that the view the rating agencies have of it makes originating loans for sale into this market relatively more costly.Wilmington's parent company, TD Bank, does have a private loan product based on alternative credit that it holds in portfolio rather than selling to the secondary market. But its reach is limited, Tadie said, noting that underwriting requires a lot of compensating factors."It's incredibly conservative," he said.

 WASHINGTON — As Congress hurdles toward yet another government shutdown, bankers might experience more collateral damage than they have in the past. Typically, government shutdowns leave financial institutions, sans those that largely serve government employees, alone. Fat Bear Week will likely not be so fortunate. Government shutdowns have almost become part of business-as-usual on Capitol Hill, a symptom of deepening partisan divides that make even must-pass legislation — like funding the federal government — difficult. Most on Wall Street assume that political gridlock in Washington will get cleared up eventually, and financial regulatory agencies tend to be funded outside of the Congressional appropriations process, and continue to function normally. But a key program expiring this year — combined with deeply-entrenched lawmakers on both sides of the aisle — could cause more economic pain than prior shutdowns. The government shutdown could happen as soon as Sunday. Here's what bankers should know about the state of Washington and its effect on the financial industry. 

Mortgage delinquency rates ticked higher in July compared with the previous month, and given that hurricane season picks up in late summer and early fall, that could drive them higher through 2024, CoreLogic said.Approximately 2.7% of outstanding mortgages were 30 days or more late on their payment or in foreclosure. This was up from 2.6% in June but down from 3% for July 2022.The home equity gains of recent years are likely going to keep borrowers who moved into the later stages of the delinquency timeline from entering the foreclosure process, said Molly Boesel, principal economist for CoreLogic.That equity opens various options for these borrowers, including the opportunity to sell the property for more than what is owed."And while home equity gains have slowed from their former rapid pace, CoreLogic projects that home price growth will pick up over the next year," Boesel pointed out. "Borrowers should continue to build equity over the coming months, even if at a more moderate rate."Earlier, CoreLogic reported home prices grew 2.5% in July on an annual basis, following two consecutive months of 1.6% gains."Nevertheless, the projection of prolonged higher mortgage rates has dampened price forecasts over the next year, particularly in less-affordable markets," CoreLogic Chief Economist Selma Hepp said at the time.First American Financial recently released its new home price index, which has data through August. Prices rose 0.7% between July and August on an unadjusted basis and by 5.6% from August 2022.Further bearing out how higher values impact foreclosures, all buckets were unchanged on a year-over-year basis except for the seriously delinquent category — 90 days or more late on the scheduled payment or already in the process. Its share declined by 0.3 percentage points from July 2022 to 1%, the CoreLogic data said.When it comes to hurricanes, events like last year's Ian, show the effect on delinquency rates. Jobs are on hold either short-term or for longer periods and these borrowers are eligible for forbearances. Delinquencies in Florida increased by 8,700 units for December 2022 because of Ian, Black Knight reported.

As home affordability decreased, sellers reduced asking prices more frequently this September, with the pace coming in above typical seasonal patterns.Approximately 6.5% of homes on the market saw asking prices reduced during the four-week period ending Sept. 27, according to new research from Redfin. The rate corresponds to approximately one in 15 properties on the market and represents an increase from 5.8% a month earlier. That is a sharp rise from what has been reported in past years over the same time frame, the real estate brokerage said.The uptick in price cuts comes as low inventory and rising interest rates take a bite out of affordability, according to several recent reports. Conditions contributing to the current state of the market appear set to continue leaving their mark on affordability over the next several months, leading analysts said at this week's Digital Mortgage conference in Las Vegas. Redfin found the median sales price rose 3.1% year-over-year, coming in at $372,500, even with "relatively low" demand. A recent rise in the volume of new listings, also atypical for the time of year, is giving home shoppers more leverage. "Buyers are using things like inspection negotiations and high insurance premiums to back out of deals," said Heather Kruayai, a Redfin agent in Jacksonville, Florida, in a press release. "They're holding a lot of the cards; today's sellers need to concede on some details to close the deal."The latest affordability data from the Mortgage Bankers Association offers few signs of improvement for aspiring homeowners. In its monthly purchase-applications payment index released this week, the trade group reported the average monthly amount applied for by new home buyers increasing by a fraction to $2,170 in August, from $2,162 in both June and July. The current figure is higher by 18% compared to the mean level of a year ago — $1,839.  "Prospective homebuyers' budgets continue to be impacted by the combination of high home prices and mortgage rates that remain higher than 7%," said Edward Seiler, MBA's associate vice president, housing economics, and executive director, Research Institute for Housing America.The latest PAPI report does not factor in September's surge in mortgage rates, with the 30-year conforming average landing at 7.41% at the end of last week among MBA members — the highest point since late 2000. Similarly, Freddie Mac reported a consistent rise in the 30-year rate throughout September after a pullback in August.Within individual segments, borrowers of Federal Housing Administration-backed mortgages saw their average payment hit a record of $1,901, jumping 2.5% from $1,854 in July and 29.4% from $1,469 in August 2022.But even with the overall PAPI increase, conventional-loan borrowers saw a fall in the mean to $2,187 from $2,197 between July and August. But the number was still well above $1,901 a year ago.The MBA's national payments index for new purchase applications inched up 0.4% to a reading of 175.4 in August compared to 174.7 a month earlier. An increase in the number reflects declining affordability. Strong income earnings of over 4% over the past 12 months helped offset the steep climb upward in payment amounts. The states showing the smallest degree of affordability were concentrated in the Western U.S., according to the MBA. Idaho led the country with a PAPI score of 269.6, followed by Nevada and Arizona at 265.7 and 238.6. 

Synovus Financial expects to post a charge-off of $23 million on a 10.75% participation in a $218.5 million syndicated credit. The Columbus, Georgia, company is just one of several banks that have warned of credit issues in the third quarter. Credit quality proved pristine through the pandemic's aftermath and into this year. Soured loans were rare, and losses held below historical averages for most of this decade.That is changing. Loan charge-offs are beginning to accumulate. More losses are expected, bringing the health of loan portfolios into focus just ahead of third-quarter earnings season in October."Across the board, the potential for loan delinquencies is the No. 1 concern," said Tim Scholten, founder and president of the community bank and credit union consultancy Visible Progress. "More challenging credit times are ahead."The U.S. economy continued to grow this year — gross domestic product expanded at a 2.4% clip in the second quarter — but elevated inflation and higher interest rates now loom large, Scholten said.The Federal Reserve boosted rates 11 times since early 2022 to combat inflation, reaching a 40-year high last year. The campaign has begun to work but borrowing costs have surged in the meantime. This has hampered commercial real estate borrowers, and office property owners in particular, given remote work trends and its enduring impact on urban centers.In fact, notable signs of weakness emerged in the second quarter of this year, when net CRE loan charge-offs among U.S. banks increased four-fold from a year earlier to $1.17 billion, according to S&P Global Market Intelligence. The firm said increased default levels motivated dozens of banks to scale back their exposures to CRE, most notably by offloading office loans.During the third quarter, several banks pre-announced expected charge-offs with their coming earnings reports. This list, which spans community banks to major regional lenders, included the $13 billion-asset OceanFirst Financial in Red Bank, New Jersey, the $36.2 billion-asset Hancock Whitney in Gulfport, Mississippi, and the $61 billion-asset Synovus Financial in Columbus, Georgia.Synovus expects to post a charge-off of $23 million on a 10.75% participation in a $218.5 million syndicated credit. It previously disclosed the sale of a $1.3 billion medical office CRE loan portfolio that implied an accompanying net loss and a coming charge-off, noted D.A. Davidson analyst Kevin Fitzsimmons.Taking an industrywide look, Fitzsimmons said that charge-off levels remain low ahead of earnings season. But this "likely isn't sustainable," he said.The concern now is that CRE woes will worsen and could spread to other loan types, given that everything from retail outlets to apartment buildings have historically depended on the traffic generated by workers flowing in and out of office towers in major cities from San Francisco to Denver to New York. About 40% of bankers surveyed by S&P in the second quarter said they expected CRE credit quality to deteriorate over the ensuing 12 months, up from 26% in a first quarter poll.The American Bankers Association's latest quarterly Credit Conditions Index, released this week, fell 2.8 points to a reading of 4.5. Anything below 50 indicates expected deterioration among bank economists, whose input is used to calculate readings. The latest figure reflects consensus among bank economists that credit market conditions will further weaken over the next two quarters and perhaps further out, the ABA said in a report.Economists "are forecasting weak growth in household spending and business investment over the next four quarters before a modest pickup in the second half of next year," said ABA Chief Economist Sayee Srinivasan.  A Piper Sandler survey of investors, released this week, found that their biggest concerns for the bank group are credit quality (44%) and, relatedly, higher interest rates (38%). The firm's head of research, Mark Fitzgibbon, said charge-offs are bound to increase through this year and into early 2024. He said the severity of loan losses depends largely on the direction of the economy and interest rates.If Fed policymakers can fully tame inflation and stop raising rates, the economy may be able to avoid a recession, or at least a steep downturn. But if full-blown malaise settles in, he said, credit quality could worsen substantially."There's going to be some pain in the system," Fitzgibbon said. "There's going to be more credit losses and challenges."

Federal Reserve Bank of Chicago President Austan Goolsbee said policymakers shouldn't place too much weight on the traditional economic idea that steep job losses are needed to quell inflation, which he said could lead officials to raise interest rates too high.This traditionalist view, Goolsbee said, "misses key features of our recent inflationary experience and that, in today's environment, believing too strongly in the inevitability of a large trade-off between inflation and unemployment comes with the serious risk of a near-term policy error." The comments were prepared for delivery Thursday at the Peterson Institute for International Economics in Washington.  Austan Goolsbee is the president of the Federal Reserve Bank of ChicagoDavid Paul Morris/Photographer: David Paul Morris/ In speech titled "The 2023 Economy: Not Your Grandpa's Monetary Policy Moment," Goolsbee argued that historic economic relationships, like that between unemployment and inflation — with prices typically rising when jobs were plentiful — may not be the best guideposts today given how different the post-Covid inflationary period has been.Goolsbee said policymakers should instead focus on how different components of core inflation are decelerating — with cooling still needed especially in housing inflation — as well as monitor productivity growth, not obsess too much on near-term real wages and keep an eye on inflation expectations.Avoid recession"The unwinding of supply shocks, the composition of demand returning to more stable patterns, and Fed credibility are central to why I think it might be possible today to reduce inflation while avoiding a deep recession," he said.Fed officials are trying to carefully calibrate policy now following aggressive action last year to bring down 40-year-high inflation. While prices have cooled, they remain far from the Fed's 2% target. The U.S. central bank left rates unchanged at their meeting last week, but 12 of the 19 officials forecast one more rate increase for this year. An update to the Fed's preferred inflation gauge, the personal consumption expenditures index, is due out Friday, with the median estimate of economists forecasting prices rose 3.5% in August, an acceleration from July.Goolsbee, a voter on policy this year, didn't say whether he favors another increase or not, though he called progress so far on inflation "really excellent.""I haven't decided what I'm going to do at the next one but at this kind of progress I feel comfortable with what I've said before: We're moving to a period where the question is not how much more is the rate going to go up — it becomes how long are we going to keep it here," Goolsbee said in a question-and-answer session following the speech.He echoed comments made earlier this week that a soft landing — where inflation fully eases without causing a recession — is possible, but risks remain. He cited higher oil prices, a slowdown in the Chinese economy, the autoworkers' strike and a potential government shutdown as shocks that could impact the economy.Goolsbee ended his speech by saying central bankers would be wise to stick to a key piece of advice from his Texas rancher grandfather: "Work 'til it's dark and pray for rain." Speaking on Fox Business in a later interview, Goolsbee said he thinks Fed Chair Jerome Powell "is going to be remembered as a fabulous Fed president." "If we pull this off, if we could get inflation down this much without having a deep recession, I think they're going to name elementary schools P.S. 2023 FOMC — this is an opportunity, not a guarantee," Goolsbee said. 

Delinquency rates on consumer loans last month hit their highest level since the spring of 2020, a potential sign that inflation and rising interest rates are taking a toll on household finances. Banks are keeping a close watch on delinquency rates, spending trends and credit originations to determine the health of the most powerful driver of the U.S. economy. Consumer spending accounts for about 70% of the country's economic output, and banks and other businesses are eager to find out whether consumer spending will help the U.S. economy avoid a recession in 2024.The share of consumer loans between 30 and 59 days past due rose 0.84% in August, up from 0.65% in August 2022, according to data from VantageScore. About 0.29% of loans were between 60 and 89 days past due in August, up from 0.21% a year ago. And 0.13% of consumer loans were between 90 and 119 days past due, up from 0.09% the previous year.  The delinquency rate for each of the three past-due timeframes was higher in August than any month since April 2020."People are relying on their credit more and in some cases are having trouble meeting their obligations," said Jeff Richardson, senior vice president at VantageScore Solutions, the consumer credit scoring company behind VantageScore.The combination of inflation and rising interest rates over the past 18 months has made it more difficult for Americans to stay on top of their loan payments. When the costs of goods and services rise, consumers often face higher monthly debt payments, and they may have to choose between necessities and debt payments.Credit cards and auto loans saw the largest jump in delinquency rates between August 2022 and August 2023, according to the VantageScore data. Because the interest rate paid on cards is tied to short-term interest rates, those monthly payments can rise more quickly than consumers had anticipated."Your monthly obligation, because of the rate increases, is much harder to meet now than it was 13 or 15 months ago," Richardson said.Still, consumers as a whole are proving resilient, according to bank executives.Consumer spending will likely help the U.S. avoid a recession in 2024, Bank of America CEO Brian Moynihan said this week. Spending by consumers at the $3.1 trillion-asset bank is up 4.8% this year, he said, but that growth is declining.Credit card utilization increased just 0.1% between July and August, according to VantageScore data, a potential indicator that consumers are wary about the prospect of taking on more debt. Originations for personal loans, auto loans and mortgages also fell in August, thanks to lenders' tighter standards and slowing demand growth for consumer loans. Only credit card originations increased in August.Economic growth is expected to slow to 1.3% in 2024, down from 2.3% in 2023, according to a forecast released Wednesday by S&P Global. Lower consumer spending on nonessential items is expected to drive much of that decline, analysts said."The increase in subprime auto loan and credit card delinquencies suggests consumer discretionary spending will soon weaken," S&P analysts wrote. "Moreover, student loan payments restart next month at a time when excess household savings have been largely depleted."Pandemic-era payment pauses and grace periods helped keep past-due rates on consumer loans low during the pandemic. Many U.S. consumers used stimulus funds and unemployment payments to stay up-to-date on debt payments and add to their savings accounts.But much of those excess savings have since been spent, and consumers drove their credit card balances up by double-digit percentages in 2022. The high rate of spending continued for much of 2023 before slowing in recent months.For banks, that means a cooling of consumer lending this year. Consumer loan growth at U.S. commercial banks was 5.6% in August, down from 12.3% a year ago, according to data from the Federal Reserve.Consumers are set to further "tighten their purse strings" in 2024, S&P analysts wrote.

With the acquisition of Black Knight, ICE Mortgage Technology has increased its "total addressable market" by $4 billion through cross selling opportunities.But that is not just limited to wider distribution of the data and analytics products that Black Knight was known for. ICE sees opportunities for the loan origination and mortgage servicing platforms to expand their reach as well, said Ben Jackson, Intercontinental Exchange president and chairman of ICE Mortgage Technology.Jackson joined other Intercontinental Exchange executives on a conference call to wrap up the Black Knight purchase. However little mention was made of the moves needed to drive the deal to the finish line.For Jackson, the opportunity "is cross-selling Encompass into roughly 40 of the over 100 MSP servicing customers that do not use our loan origination system. This represents roughly 15% to 20% of total annual loan origination volume."Not addressed was whether any of those customers had been users of Empower, the Black Knight loan origination system sold to Dark Matter, a business funded by Constellation Software.Dark Matter declined to comment. A request for comment from Intercontinental Exchange had not yet been returned.But the vertical expansion was just as troubling to some deal opponents as the concentration in the LOS and in product and pricing engines whose resolutions allowed the merger to close. On the other side, is the opportunity to cross sell MSP "into roughly half of the top 150 Encompass customers that do not use MSP today, representing roughly 10% to 15% of first lien servicing market share," Jackson continued.During the call, Jackson took the opportunity to bring up again the expanded relationship with JPMorgan Chase. The bank is implementing ICE Mortgage's data and document automation platform.Chase is one of Black Knight's largest servicing customers, "and they are the top five global bank that we are implementing on Encompass on both their retail and correspondent channels, replacing in-house legacy infrastructure," said Jackson."This is a perfect example of a large client bringing together a complete front to back experience for their clients through one trusted platform provider and is a model we plan to replicate with many more customers," he continued.One of the few pieces of the transaction Jackson did address was the Optimal Blue PPE, formerly owned by Black Knight, which acquired it in July 2020..Jackson referred to the "long-standing relationship" between Optimal Blue and the companies that are now part of ICE."Importantly, Optimal Blue is still fully available to ICE's customers with ICE continuing to capture value through an existing revenue share arrangement for existing and new customers," he said.A 10-year commercial agreement has been entered into that codifies and extends the two-decade long relationship. But given the PPE portion of the Federal Trade Commission complaint, it is no surprise and was probably mandated that the internal engine in Encompass will receive management's attention."In parallel, we plan to maintain and invest in our own product and pricing engine, further strengthening the mortgage ecosystem by providing additional options and greater efficiencies to lenders, servicers and partners, ultimately, lowering acquisition costs for lenders and enabling those savings to be passed to the consumer," said Jackson.When it comes to expense savings, Intercontinental Exchange expects to find $200 million in synergies by the fifth year after the transaction, said Warren Gardiner, its chief financial officer."It is worth noting that following the close we have already identified approximately $40 million of annualized savings, giving us increased comfort and our ability to achieve our $200 million target," Gardiner said.

Avoiding a temporary stoppage of non-essential federal work — the fourth such shutdown in the last 10 years — would require members of Congress to pass legislation for Biden to sign into law by midnight on Sept. 30 or approve a continuing resolution that would allow the government to remain operating in full.Bloomberg Creative Photos/Bloomberg Creative Credit unions catering to federal workers are preparing to reestablish emergency relief programs as the deadline to avoid a government shutdown fast approaches.Republican and Democratic officials in the U.S. Senate and House of Representatives continue to further conflicting funding plans for the 2024 fiscal year, remaining deadlocked on cuts to discretionary spending limits as well as key issues such as border security with Mexico and aid to Ukraine amid the ongoing war with Russia. President Biden and House Speaker Kevin McCarthy, R-Calif., worked to pass a bipartisan agreement earlier this year that suspends the debt limit until 2025 and features spending constraints."Our work is far from finished, but this agreement is a critical step forward and a reminder of what's possible when we act in the best interests of our country," Biden said in a press release in June.Avoiding a temporary stoppage of non-essential federal work — the fourth such shutdown in the last 10 years — would require members of Congress to pass legislation for Biden to sign into law by midnight on Sept. 30 or approve a continuing resolution that would allow the government to remain operating in full.In response to the looming possibility that the Senate and the House fail to gain any ground, credit unions' leaders are re-establishing tailored aid services for families enduring the loss of work.Executives with the $35.5 billion-asset Pentagon Federal Credit Union in McLean, Virginia, will offer qualifying members who receive their paycheck directly into a PenFed checking account access to funding through a no-interest loan equal to their net pay, up to $6,000. Other programs include modified payment plans for home loans and a low-interest personal loan for those whose pay isn't deposited directly into a PenFed checking account.Similarly, the $165.3 billion-asset Navy Federal Credit Union in Vienna, Virginia, will offer furloughed members paycheck advance funding and other special services.Industry experts at the helm of smaller institutions are looking to bring back programs they've used in the past. Greg Keller, president and chief executive of Federal Employees Credit Union in Birmingham, Alabama, began reviewing the programs his credit union offered during the December 2018 shutdown to determine how he could adapt them to best meet the needs of affected members."Last time a shutdown happened, people started calling with concerns like, 'What am I gonna do' and, 'How am I gonna make my payments,' so people will be ringing the phones off the hook once again to find out what they want to do," Keller said. The credit union has roughly 1,800 members employed by federal agencies ranging from the Social Security Administration and the United States Postal Office to the Federal Bureau of Investigation. Keller explained that the $18.4 million-asset Federal Employees will allow current eligible members to skip payments on their outstanding loans for the duration of the closure and apply for an emergency $1,000 loan featuring zero interest and a six-month repayment time frame."Some government employees, just like employees [in other industries], struggle paycheck to paycheck to afford their basic essentials," Keller said.Many credit union and bank leaders have experienced past government shutdowns, but the record-breaking closure that started under former President Trump's administration in December 2018 and lasted for 34 days created new challenges to overcome.Approval rates for mortgage applications were slowed due to the lack of income verification documents from the Internal Revenue Service, the Federal Housing Administration pulled back on helping institutions underwrite loans, submissions to the Small Business Administration piled up, and more.Industry advocates with the Credit Union National Association are encouraging members to be proactive by reaching out to their institutions and determining what programs may or may not be available to them.Jason Stverak, deputy chief advocacy officer for federal government affairs at CUNA, underscored that the impasse between the two legislative bodies will most likely lead to a shutdown, but that leaders should remain optimistic about representatives "passing the necessary legislation to keep the government open and keep the lights on," he said."While things may look dire at this time, there could be agreements at any moment and they could work at legislative lightning speed, so to speak," Stevrak said.