Affairs shut down with the rest of the government last week, most lenders that work with them gamely conducted business as usual. But if the lapse in services had lasted any longer, they say, it would have been terrifying. "We were fortunate that the shutdown did not last longer," said Buck Bibb, senior vice president of residential loans at Bank United of Texas. Homebuyers who rely on FHA loans are often first-time buyers who are unfamiliar with the mortgage process, Mr. Bibb explained. Any delay only adds to their already high level of anxiety, and real estate brokers can risk losing sales. If the shutdown had lasted 30 days, instead of just four, it would have been "very unsettling to the real estate market in general," said Mr. Bibb. The unprecedented nature of the problem left lenders groping for a strategy. Most opted to follow the lead of Countrywide Credit Industries and the advice of the Mortgage Bankers Association: They continued to take applications for government loans and to close on loans according to schedule. Because of a new policy by the office of Housing and Urban Development that allows lenders to select their own appraisers, most mortgage brokers who handle government loans could do most of the processing, said Norman Edwards, associate director at the Mortgage Bankers Association. Only BancBoston Mortgage, Jacksonville, Fla., strayed from form, issuing a memo to employees telling them that they would not be closing any wholesale government loans while waiting to hear from the Office of Housing and Urban Development. The memo was rescinded that afternoon after BancBoston communicated with the mortgage trade group and learned what other lenders were doing. "There was never a disruption at all" in the loan-making process, said Mark Johnson, executive vice president of BancBoston. Because closing a Federal Housing Administration or Veterans Administration loan normally takes three to six weeks, or longer, the four- day lapse did not cause any major problems for lenders that planned ahead. Lenders need to ensure they have a Mortgage Insurance Certificate and Loan Guarantee Certificate before a government loan can enter the Ginnie Mae securitization pool. Additionally, credit checks are usually done by the FHA or VA to ensure that the borrower has not previously defaulted on a government loan. "We order loan numbers as soon as the loan comes in," said BankAmerica loan officer Harry Slifer. "For the loans that we did not have case numbers on, we just held back the approval." First United of Texas, Houston, issued a disclosure to all FHA and VA loan applicants stating that it could not guarantee normal processing times and events. Corinthian Mortgage of Overland Park, Kan., instructed loan officers to avoid making "any promises they could not keep," said president Edgar Wood, but continued to close on loans that were scheduled to close. "We rolled the dice ourselves for that week or so," Mr. Wood added. "It's a little risky, but we weren't betting on losing the farm." Probably most affected by the delay were FHA loan processors themselves. The federal shutdown had "a ripple effect all over the country, disrupting people's everyday lives," said one FHA spokeswoman. The FHA normally processes 2,500 loans a day, leaving them after the four-day furlough with 10,000 loans to deal with. "It's going to be a busy Thanksgiving," the spokeswoman added. The FHA expects to be up to speed soon, she said.

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