Proposed cuts to HUD
Would love to hear from folks in the affordable space on how they're reacting to Trump's proposed cuts to HUD.
For those not aware, the memo from OMB includes ~ $26.72b in cuts to State Rental Assistance Block Grants (Tenant Based Rental Assistance, Project-Based Rental Assistance, Housing for the Elderly and Housing for Persons with Disability), as well as eliminating Community Development Block Grants (-$3b) & the HOME program (-$1.25b).
Other major ramifications would be transferring the operations and oversight of all rental assistance programs to the states as well as implementing a two-year cap on rental assistance for "able bodied adults"
More specifics of the proposed cuts can be found on pages 25 & 26 in the link below
This very well may be shit on a wall at this point, but the over arching theme is (a) less money for rental assistance, (b) reduce or remove federal involvement in rental assistance, & (c) narrowing scope of rental assistance.
I personally would not want to touch deals with S8 overhang right now, but I continue to see clients put in tight offers on project-based deals.
I'll start this off by saying that the project-based system is long overdue for an overhaul. The industry operates on a blind assumption that their 20-year MUTM HAP contracts will be renewed in perpetuity and should continue to offer major upside potential with limited downside risk (from a rental income perspective). MUTM's exist to boost sale / refi proceeds, and provide little-to-no value to tenants or society.
I've been intimately involved with a few CDBG deals and in agreement with the cuts on those, cant speak on the rest. The amount of $ going to lawyers, "feasibility consultants", and developers is a huge waste, and most of the projects should just be funded with private investors (the projects aren't housing related).
On a related note I'm in the U/W process with 2 different MAP lenders, and both lenders have shortened their timelines for firm commitment recently. Apparently HUD has "never been more responsive."
First, the obvious. Mr Trump's complete inability to govern or make a deal/negotiate, and his willing trampling on the Constitution and political norms, simply means he'll open the door for the next liberal President to do exactly the same thing he is. So on that hand, this is temporary.
On a more meaningful note for people who actually enjoy discussing policy instead of licking a wannabe dictator's boots, HUD programs are some of the most popular in the country and generally have broad bipartisan support in Congress. Mr Trump will immediately be sued, and since he has no actual national security grounds on which to infringe on Congress' power of the purse or to abrogate contracts, it's hard to imagine any of this sticking in court. So again, all he's doing is hurting the creditworthiness of the US government and causing a lot of economic and financial pain and disruption for what will, ultimately, be no purpose.
Really the only intelligent read on this is that Mr Trump will use the eventual failure of all this shit to make the argument the Constitution should be suspended and himself made eventual dictator. Kind of like he tried in 2020.
We have a 1.9 trillion dollar operating deficit and 9 trillion of T bonds that will need to be rolled over by 2026, that were originated at near 0 interest rates. I would much rather we cut useless HUD programs then go into a debt spiral...... what a wild comment bro.
I think Ozy is implying that any attempt to cut HUD by executive order or challenge congressional authority would further degrade trust in US institutions.
Ozy, my understanding of the attached pdf is this is simply a budget request. I am aware of different ways that the executive is fucking with HUD funding for certain blue city's, but I don't think there is any plan to EO these changes onto HUD [yet].
Bingo. What a shocker, that the Trump supporter didn't understand nuance or analysis.
Normally I'd say yes. But the Trump Administration is very obviously gearing up for a showdown with the courts, so they can claim Mr Trump is being unfairly targeted by literally everyone (the obvious implication of that will be lost on every Trump supporter, if they were intelligent enough to get it they wouldn't vote for him) so he can abrogate the Constitution and either run again, or manage to persecute his political opponents to the point where they won't be able to effectively run for office.
This is a man who is openly discussing policies that are the foundation of the Constitution, who is deporting US citizens, trampling on free speech... all because no one let him do whatever he wanted and then praised him for it the first time he ran, when he killed more Americans than any President in US history.
So cut Social Security, Medicaid/care, or military spending. Anything else is just pursuing a political goal and pretending it's about fiscal responsibility. You really think the Trump Administration gives a shit about the national debt or deficit when they're cutting a couple billion dollars from the budget and using that to justify to a $10 trillion tax cut? My man, get your head out of your ass. Unless you propose cuts or reforms to those three things, or an increase in taxation, you don't get to claim you care about fiscal responsibility. It's laughable on it's face! Mr Trump has done more to sink us into this "debt spiral" than anyone since Reagan, so don't give me this nonsense about caring about debt. Especially not when the man running the show is most famous for his complete inability to ever pay back a loan. There's a reason Mr Trump was all but broke in 2015, and it wasn't the Deep State - it was his incompetence as a businessman
The millions of people who rely on HUD programs don't think it's useless. If Mr Trump decided to close down the military bases in every red state to save money, I'd say he earns the leeway to cut whatever else he pleases. When his cuts are all meaningless amounts of money that go to help the poor and the desperate, while he uses the proceeds to allow his billionaire cronies to further stuff their pockets through totally unnecessary tax breaks, I think we can safely claim that whatever YOU think, none of this has anything to do with a "debt spiral."
Moreover, you missed the point entirely, which is that Mr Trump trying to illegally cut funding to federal agencies will ultimately be rolled back, because, you know, it's illegal, but in the meantime all he does is erode trust that the federal government will pay its bills and meet its contractual obligations. Kind of like when he threatened to default on the US national debt in a moment of throwing a temper tantrum. Mr Trump is actively trying to erode the checks and balances inherent in the Constitution, and the only possible reason he can be doing so is so that he can later claim to his mouth breathing, boot licking supporters that the "deep state" has thwarted him and he should be allowed to suspend the Constitution. Kind of like when he last attempted a putsch, except this time he's got the PR better planned.
I got good news for you man $2 trillion of that $9 is t-bills
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