If the government shuts down, what happens to all the Uncle Sam-backed mortgages that are in the pipeline? They account for about 90% of U.S. home loans, so reducing that flow could hurt the housing recovery.The good news is that most government-backed home loans - those purchased and securitized by Fannie Mae and Freddie Mac - will be unaffected by a shutdown. Those companies pay for their operations out of the fees that they charge lenders.The bad news is that loans guaranteed by the Federal Housing Administration, the Veteran's Administration and the rural development loans of the United States Department of Agriculture, won't be processed. If an application for an FHA-insured loan has not been approved by the time of the shutdown, it will have to wait until after the shutdown ends.FHA-backed loans accounted for 45% of all mortgages used to purchase homes issued in 2012, according to the Federal Reserve. The FHA alone insures about 60,000 loans a month."FHA will be unable to endorse any single-family loans and FHA staff will be unavailable to underwrite and approve new loans," in the event of a shutdown, according to the contingency plan from the Department of Housing and Urban Development, the FHA's parent agency.Of the 9,300 employees who work for HUD, only 350 (3.8%) will be able to work, according to a HUD release."The housing market is searching for recovery, and we've been seeing signs of optimism," said said David Stevens, CEO of the Mortgage Bankers Association. "This could have a sizable impact on the recovery."Many buyers have no alternative to FHA, VA or USDA mortgages. First-time buyers in particular often lack the cash for the large downpayments that other lenders require. FHA rules allow homebuyers to make a downpayment of as little as 3.5% of the selling price -- $7,000 on a $200,000 home. A 20% downpayment is normal, which would be $40,000 for that $200,000 purchase.FHA-Backed Mortgages Will Be Halted In a Shutdown