One of the major effects of a prolonged government shutdown would be completion of home loans as lenders would be unable to verify the income of the loan applicant. This comes as the Internal Revenue Service and the Social Security Administration employees become furloughed, as predicted by many mortgage industry experts and participants.

Part of the requirements of Fannie Mae and Freddie Mac is the submission of proof of income of the loan applicant. These companies would then package them into securities for direct verification by the IRS. This process is the safest and surest ways to verify income capacity of individuals applying for mortgages.

According to the Mortgage Bankers Association Senior Vice President Peter Mills, "If we go beyond a week, it'll start to get dicey, particularly for the small lenders." He made the remarks during a phone interrview, where he added that alternatives to this current process would open risk to the banks to repurchase loans from the real estate developers.