WASHINGTON — President Trump's budget released Thursday calls for slashing the Department of Housing and Urban Development's funding by 13%, or $6.2 billion, compared with 2016 levels, a blow to many bankers who say affordable housing programs and other HUD initiatives are vital to their work.
The president wants to go after "wasteful programs, duplicative programs, programs that simply don’t work," Mick Mulvaney, director of the Office of Management and Budget, said Thursday during a conference call with reporters. "We've spent a lot of money on Housing and Urban Development over the last decades without a lot to show for it. Certainly there are some successes, but there's a lot of programs that simply cannot justify their existence, and that's where we zeroed in."
The budget director said that HUD Secretary Ben Carson wants more "flexibility to move money around" to fit his priorities, and that under the budget proposal, "he would have tremendous flexibility to do that."
The plan has drew fire from Democrats after it was disclosed by The Washington Post last week. Sen. Sherrod Brown, D-Ohio, said the "proposal to gut critical funding for housing, transit, and community development contradicts the President’s repeated promises to invest in America’s infrastructure and rebuild our cities."
But the budget appears to leave the Federal Housing Administration intact, which will be a relief to many mortgage lenders, while avoiding tougher issues like what to do with the government-sponsored enterprises Fannie Mae and Freddie Mac.
"The President’s budget highlights the role of the FHA in promoting homeownership and providing mortgage insurance but provides no additional details," according to analysts at Compass Point Research & Trading. "The skinny budget does not have a reference to GSE/housing finance reform."
To be sure, the budget is highly unlikely to remain unchanged as it works through the legislative process. Most budgets amount to aspirational goals of what an administration would like to do, rather than what is actually passed.
Consumer groups remain worried about the overall cuts, however. The National Low Income Housing Coalition is concerned the budget cuts will "usher in a new age of homelessness" and this country will experience a "dramatic increase in the number of people sleeping on the streets, in cars, and in shelters," according to the coalition's president and chief executive, Diane Yentel.
"More than 200,000 seniors, families, and people with disabilities will be at immediate risk of evictions and homelessness, and local communities will be starved of the funding they need to build and repair affordable homes and revitalize distressed communities," Yentel said in a statement Thursday.