HUD programs face elimination in proposed 2018 federal budget

Written By: Joel Palmer, Op-Ed Writer

The Trump Administration’s 2018 budget for the Department of Housing and Urban Development (HUD) indicates a desire to continue promoting housing while reducing the federal government’s role on urban development.

Amid a 13 percent reduction in discretionary funding for the department, HUD officials say its proposed budget “continues to support homeownership.” 

HUD is seeking up to $400 billion in new loan guarantee authority through the Federal Housing Administration’s mortgage insurance programs. 

It also proposes another $500 billion in new guarantee authority for Ginnie Mae, which provides liquidity to mortgage lenders to obtain a a better price on loans in the secondary market in an attempt to help low and moderate-income homebuyers.

The administration is also seeking $65.3 million to support HUD’s fair housing mission, the same funding level provided in the prior three years, as well as $130 million to promote healthy and lead-safe housing. 

But there’s a reason the budget document released at the end of May is titled “Major Savings and Reforms.” In all, the President’s budget for fiscal 2018 seeks nearly $27 billion in program eliminations and more than $30 billion in discretionary spending reductions across nearly every department.

Budget proposals for HUD include more than $4 billion in savings from current spending levels by eliminating four programs. Another $2 billion would be cut from HUD’s budget by reducing spending on two programs.

About half the $6 billion reduction in HUD’s discretionary budget would occur through elimination of the Community Development Block Grant program. 

Since its inception in 1974, CDBG has provided more than $150 billion in grants for housing rehabilitation, blight removal, infrastructure and public improvements. 

However, according to the administration, the program “has not demonstrated results.” The budget document states that funds have not gone to communities that have the most need for assistance. Also, the increasing number of localities qualifying for grants has reduced the size of individual grants, making them less impactful. According to the budget document, state and local governments and the private sector are better positioned to meet the needs that the CDBG program was designed to address.

“The broad purpose and flexible nature of this unauthorized program allows for a wide range of community activities to be supported, but it is this same flexibility that creates challenges to measuring the program's impact and efficacy in improving communities,” according to the budget report.

Another $948 million would be cut from HUD’s budget by eliminating the HOME Investment Partnerships Program, which provides grants to expand the supply of affordable housing for low-income households. Like with the CDBG, the administration believes state and local governments can better address the need.

HUD’s budget also seeks to eliminate the $125 million Choice Neighborhoods program and the $56 million Self-Help and Assisted Homeownership Opportunity program. Another $1.9 billion would be cut through a reduction in Rental Assistance Programs, from $37.16 billion to $35.23 billion. And about $108 million would be saved by reducing spending on Grants to Native American Tribes and Alaska Native Villages.

“This Budget reflects this Administration’s commitment to fiscal responsibility while continuing HUD’s core support of our most vulnerable households,” said HUD Secretary Ben Carson. “We will work very closely with Congress to support the critical work of our agency as we vigorously pursue new approaches to help work-eligible households achieve self-sufficiency.”

Because of the elimination or reduction of programs designed to assist low-income individuals and communities, several advocacy groups have protested HUD’s budget proposals, including the Center on Budget and Policy Priorities and the National Low Income Housing Coalition.

About the Author

As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.

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