Memo mixup: Trump calls for freeze of 100 HUD programs, then denies it

Editor’s note: This story has been updated with further information released by the Trump administration, as well as statements from the Mortgage Bankers Association and the Federal Housing Administration.

The Trump administration caused confusion across numerous industries on Tuesday morning when it sent a memo that directs federal agencies to conduct a review of funding for thousands of government programs, including 100 that are administered by the Department of Housing and Urban Development (HUD).

The memo states that all agencies must submit an analysis that includes answers to 14 questions and submit it to the Office of Management and Budget by Feb. 7. The review applies to any agency and program that has funding planned through March 15.

Later on Tuesday, though, the administration sowed even more confusion by releasing a follow-up memo — formatted as question and answer — stating that funding related to rental assistance and “similar programs” will not be paused.

But the follow-up memo also directs agencies concerned about programs in question to consult with OMB to begin to “unwind these objectionable policies without a pause in payments.” In the next answer down, it says that the pause — which it previous said isn’t a pause — is temporary and necessary “to act as faithful stewards of taxpayer money.”

Major programs with HUD include Community Development Block Grants (CDBG), the public housing operating and capital funds, Section 8 housing vouchers, the Choice Neighborhoods program and Project Based Rental Assistance.

There are numerous other programs related to youth homelessness, native Americans, fair housing, lead reduction, veterans housing, people with AIDS and manufactured housing.

Politico was the first to report the news.

“Even a short pause in funding could cause significant harm to low-income families and their communities,” said Low Income Housing Coalition Interim President and CEO Renee Willis in a statement. “The longer the freeze continues, the greater the risk that low-income households receiving federal rental assistance could face eviction, and in the worst cases, homelessness, homeless shelters may be forced to close their doors, and nonprofit organizations may have to lay off staff.”

The chaos Tuesday came a day after the Trump administration sent a memo that freezes payments for foreign aid and federal grants.

In response to that memo, Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit released a statement Tuesday saying the Federal Housing Administration (FHA), Department of Veterans Affairs and the Department of Agriculture “must clarify” that the memo does not suspend payments for single-family and multifamily loan insurance or guarantee programs at those agencies.

“Americans are going to the closing table tomorrow and deserve to know that their loan will close on their home purchase,” the statement reads. “Without this clear assurance that the federal government will insure new loans or pay claims under these programs, there will be severe harm to borrowers and disruption to the mortgage market.”

However, a federal judge blocked the implementation of the funding freeze from the first memo, which was schedule to effect at 5 p.m. ET. And the FHA released a statement confirming that its “Single Family Title I and Title II mortgage insurance programs remain operational and are not subject to the pause in federal grants and loans outlined in OMB’s memo to federal agencies today.”

Programs related to mortgages and loans also made the list in Tuesday morning’s memo. Those include mortgage insurance for rehabilitation projects, manufactured housing and disaster victims.

Notably missing is the Low Income Housing Tax Credit (LIHTC) program, which real estate developers use to help fund projects in exchange for renting a percentage of units at affordable rates.

Funding levels for HUD programs are determined by the budget process between Congress and the presidential administration. Typically the administration submits a budget request, and Congress negotiates on the basis of that request and then sends their agreement to the president for approval. 

Given this, it’s unclear whether the administration has the legal authority to freeze funding for programs it targets in the memo. Many of the programs could present thorny political programs, most notably veterans housing and CDBG, which state and local government heavily rely on.

During Trump’s first term, his budget requests included defunding and shuttering many of the same programs that are targeted in Tuesday’s memo, including CDBG, public housing, rental vouchers and veteran housing.

The current review is part of a broader effort by the Trump administration to shrink the footprint of the federal government. Monday night the administration ordered a freeze on all foreign aid, and personnel at many federal agencies have already been affected.

On Friday, the Trump administration fired more than a dozen inspectors general, including Rae Oliver Davis, who served in that capacity for HUD.

Previous moves by Trump that affect housing include a federal hiring freeze and regulatory freeze.