WaPo: Trump Administration Mulling $6 Billion in HUD Cuts

Documents obtained by The Washington Post show that the Trump administration has looked at proposals that would slash more than $6 billion from the Department of Housing and Urban Development’s budget, according to a story published late Wednesday night.

The Post report doesn’t specifically mention any proposed cuts to the Home Equity Conversion Mortgage program; rather, the savings would come largely from building maintenance initiatives, community planning and development projects, and housing assistance programs for low-income and elderly Americans, such Section 8 and Section 202. Were the administration to receive all of the concessions presented in the report, HUD’s budget would fall to $40.5 billion — a drop of 14% — when fiscal year 2018 begins in October, the Post said.

Officials from multiple branches of the federal government were swift to preach patience when contacted by the Post. The paper reported that White House press secretary Sean Spicer deferred to his counterpart at the Office of Management and Budget when asked for comment; in turn, OMB spokesman John Czwartacki told the Post that it was “premature for us to comment” and labeled the proposal an “internal discussion.” A HUD spokesman referred to the plans as “a work in progress,” and HUD Secretary Ben Carson’s chief of staff did not respond to requests for comment entirely.

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A New HUD Worldview

The cuts would be consistent with Carson’s view of HUD’s role in American society, which he laid out broadly in his first address to department staffers on Monday. While Carson’s controversial comparison of enslaved Africans to voluntary immigrants drew the most news coverage and social-media outrage this week, the new secretary also expounded on his philosophy of self-reliance and entrepreneurship, hinting at a more laissez-faire approach toward helping low-income and other vulnerable Americans to meet their housing needs.

“Everything that we do, every policy: No favorites for anybody, no extras for anybody, but complete fairness for everybody,” Carson said in the speech.

The proposals also fit neatly with President Trump’s stated desire to rein in domestic spending across virtually all departments, with the notable exception of defense; Trump is currently looking for $54 billion in savings to funnel to the armed forces and other homeland-security initiatives, the Post noted.

Withering Criticism from Left

Despite the preliminary nature of the plans, Trump’s critics have already gone on the attack. The president of the National Urban League, Marc Morial, told the Post that the plan would be “devastating and hardhearted.” Just this morning, Rep. Maxine Waters, a California Democrat and ranking member of the House Financial Services Committee, released a scathing statement that labeled the HUD proposals as “harmful.”

“If Donald Trump really cared about struggling Americans, he would be increasing funding to these critical programs, not planning brutal cuts,” Waters said. “Make no mistake: This plan would result in more people living on the streets.”

Update, 4:15 p.m. CST: The Huffington Post obtained an internal e-mail from Ben Carson to HUD employees, which according to the news site read, in part: “Please understand that budget negotiations currently underway are very similar to those that have occurred in previous years. The budget process is a lengthy, back and forth process that will continue. It’s unfortunate that preliminary numbers were published but, please take some comfort in knowing that starting numbers are rarely final numbers. Rest assured, we are working hard to support those programs that help so many Americans, focus on our core mission, and ensure that every tax dollar is spent wisely and effectively.”

Written by Alex Spanko

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  • The HECM program most likely has one more year with low scrutiny. HUD has kept it from being a huge burden to the budget. Yet all of its operating and oversight costs are budget costs not costs paid from HECM FHA insurance premiums.

    The losses in the MMI Fund will become a problem if the total ending balance in the MMI Fund is below its required 2% reserve level or if there are significant complaints about the insurance premiums paid by the borrowers in the other MMI Fund programs. Those complaints have been growing without apparent knowledge of the $7 billion held in the HECM portion of the MMI Fund transferred from other programs accounted for in the MMI Fund.

    Fiscal 2018 could be a very tough year for the HECM industry in several different ways.

  • There are three areas subject to the budget when it comes to HECMs. The first is normal operations which have historically never been paid for by MIP. Second, is any cost overruns from the projected losses from the book of business for the budget year (in the instant case, fiscal 2018 total endorsements) in consideration. Finally, there are the counseling subsidies.

    Of the three, the discretionary piece is the counseling subsidies. Will the budget be so tight that there will be no counseling subsidies for years to come? Nothing says these are coming but the budget has yet to be submitted.

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