Trump Budget: Serious About HUD Cuts, But Details Scarce

The White House delivered on its promise to propose historic cuts to the federal budget, submitting a fiscal year 2018 framework that would slash $54 billion from a wide variety of government agencies in order to fund substantial investment in the armed forces and the Department of Homeland Security.

President Trump’s budget — “America First: A Budget Blueprint to Make America Great Again” — was light on details, but the section on the Department of Housing and Urban Development confirmed rumors from last week about drastic cuts. Just as The Washington Post reported based on leaked documents, Trump’s budget would take $6.2 billion from HUD’s coffers, a drop of 13.2% from the fiscal 2017 budget.

Among the programs that would be put out to pasture: the $3 billion Community Development Block Grant Program, which provides funding to communities for a wide variety of development projects; the Self-Help Homeownership Opportunity Program, which gives money to community organizations to buy properties and then make improvements; and the Section 4 affordable and community housing program.

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The budget includes revealing commentary on the nature and reasoning behind the cuts, showing the Trump administration’s preference for private-sector investment and state-level control instead of federal funding for housing. For example, the document says the Section 4 program “is duplicative of efforts funded by philanthropy and other more flexible private sector investments.”

When discussing the elimination of multiple programs that fund local community-building initiatives, the Trump administration says: “State and local governments are better positioned to serve their communities based on local needs and priorities.”

The HUD section wasn’t entirely about programs that Trump intends to eliminate: The budget also includes $130 million — $20 million more than fiscal 2017 — in funding for lead removal efforts in public housing, a favored initiative of HUD Secretary Ben Carson. Trump’s plan would additionally provide $35 billion for rental assistance programs.

The budget does not mention the Home Equity Conversion Mortgage program, but the document is notably lighter than most presidential budget proposals at only 53 pages; by comparison, President Obama’s fiscal 2017 budget blueprint clocked in at 170 pages, with a nearly five-page introduction from the president addressing Congress and a variety of tables with specific data on funding for departments and programs. Trump’s budget has only four tables and a little more than a page of introduction, in which the current president rails against wasteful spending and emphasizes the importance of defense funding.

“In these dangerous times, this public safety and national security Budget Blueprint is a message to the world — a message of American strength, security, and resolve,” Trump wrote. “This Budget Blueprint follows through on my promise to focus on keeping Americans safe, keeping terrorists out of our country, and putting violent offenders behind bars.”

Trump also dedicated a passage of his introduction to deep proposed reductions in foreign aid, echoing campaign rhetoric in which he urged spending on America first and requiring the rest of the world to take care of its own problems.

“Many other Government agencies and departments will also experience cuts,” Trump wrote. “These cuts are sensible and rational. Every agency and department will be driven to achieve greater efficiency and to eliminate wasteful spending in carrying out their honorable service to the American people.”

In a statement issued Wednesday morning, HUD promised more detail about its fiscal year 2018 budget in May, and pointed to a goal of “self-sufficiency” for recipients of HUD benefits.

“The spending plan supports the longstanding homeownership mission of the Federal Housing Administration to provide mortgage insurance to credit qualified households,” the statement said.

Later in the day, HUD released a statement attributed to Carson that echoed many of the same sentiments.

“The discretionary budget plan released today by President Trump aligns with Agency plans to provide rental assistance to low-income and vulnerable households and to help families achieve self-sufficiency,” Carson said, according to the statement.

“The budget also promotes fiscal responsibility at HUD by promoting better efficiencies and leveraging IT modernization. I look forward to working with the President and remain keenly focused on HUD’s mission and core values,” Carson said.

National Reverse Mortgage Lenders Association president and chief executive officer Peter Bell preached caution in a statement e-mailed to RMD.

“Until we see the detailed budget proposal from the President, it is hard to know exactly how the HECM program and our industry could be impacted,” Bell said. “It is reassuring to see that the President’s budget blueprint affirms the importance of FHA’s mortgage insurance programs, but it is also unclear how the proposed 13.2% decrease to the HUD budget could affect overall operations at the agency.”

Trump’s budget proposal is by no means final. Any bill would still have to pass both houses of Congress, and resistance to the austere plan is already building on both sides of the aisle.

“The administration’s budget isn’t going to be the budget,” Sen. Marco Rubio, a Florida Republican, told The Washington Post. “We do the budget here. The administration makes recommendations, but Congress does budgets.”

As the Post reported, Trump and Congress must reach some kind of budget agreement by the end of April, when a stopgap measure runs out, in order to stave off a potential government shutdown. The fiscal year 2018 budget, in whatever form Congress and the president hammer out, will take effect October 1.

Written by Alex Spanko

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  • As to the losses from HECMs in the MMI Fund due to the ineptitude of FHA during the Obama Administration, what will a Republican controlled Congress require of FHA? It is doubtful if we will see an answer in the budget process but we may get a hint. Remember how Senator Corker held up the confirmation of Carol Galante as FHA Commissioner? What do the Senator and others have in mind this time when the situation is far worse with actuarial projections showing annual losses past the end of this decade?

    Since the MMI Fund is within its reserve requirements, will anything come up in Congressional budget hearings? Is the push from forward mortgage industry leaders regarding the drag HECMs have on the forward programs in the MMI Fund sufficient to bring up during the budget process a need to restructure the MMI Fund or somehow require HUD to further tighten up on the structure of HECMs until the losses begin to substantially dwindle from their present level?

    Is there any wonder Peter is preaching caution? The HECM program is needed despite what the Democrats tried to achieve with it and running the HECM program is the responsibility of FHA.

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