KBRA Releases Research – RMBS Exposure to U.S. Government Shutdown

NEW YORK--(BUSINESS WIRE)--KBRA releases research analyzing RMBS exposure to the U.S. government shutdown on October 1, 2025, which furloughed thousands of federal employees. Over 350,000 are based in the Washington-Arlington-Alexandria, DC-VA-MD-WV metropolitan statistical area (D.C. MSA), according to the St. Louis Fed, with totals higher when contractors are included.

Furloughs and potential permanent job losses during this period could create financial strain for impacted individuals. While the full impact of the shutdown remains uncertain at this point, this report examines the potential exposure of the KBRA-rated residential mortgage-backed securities (RMBS) universe to the D.C. MSA, where many affected borrowers reside.

Key Takeaways

• The current government shutdown could affect the employment status of a significant percentage of the federal workforce, with approximately 12% concentrated in the D.C. MSA, where an estimated 5.5% of residents are federal workers.
• The overall loan performance of loans in the D.C. MSA has historically tracked closely to other major MSAs based on ever 60+ day delinquencies (DQ).
• Depending on the length of furloughs, and, more importantly, the degree of permanent job losses, transactions with substantial exposure to affected borrowers could experience meaningful performance impacts.
• Indirect impacts could be felt by non-federal workers dependent on business from the federal workforce, with particular impacts on non-qualified mortgage (non-QM) RMBS backed by loans in the area.
• Private-label securities (PLS) with significant geographic exposure to the D.C. MSA are generally backed by prime-quality loans but could be subject to declining performance trends in the future.
• Permanent job losses could place downward pressure on D.C. MSA home values through reduced incomes and relocations. However, limited housing inventory and alternative employment opportunities may help to mitigate the impact.

KBRA will continue to monitor the ongoing shutdown and associated collateral performance.

Click here to view the report.

Related Publications

• Appendix: KBRA-Rated PLS D.C. MSA Exposure % (All Outstanding)
• KBRA Non-QM RMBS Default Study: A Decade of Insights
• VantageScore 4.0 Adoption—RMBS Credit Paradigm Shift?
• U.S. RMBS Credit Indices: August 2025
• RMBS Trend Watch: Deconstructing Non-Prime Risk Layers

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1011714