- March 28, 2017
- Posted by: tjmuro
- Category: Funding trends, HUD, Multifamily Affordable Housing
In view of the growing need for multifamily affordable lending and low-income housing development in the United States, all the spotlight is on the expected role of Ben Carson, former neurosurgeon and Republican presidential candidate, who is to head HUD, under the Trump Administration.
Despite the expected FY2018 budget cut of HUD, which may result in thousands of Americans out of safe and affordable housing, we are still optimistic about Carson’s leaderships and the positive decisions he has been pledging for HUD’s loan insurance programs for multifamily affordable housing and healthcare. The positivity is based on the following points:
- Ben Carson has labeled the role of FHA as very important in providing multifamily affordable lending housing. He also cited the 221(d)(4) program that insures loans spent to develop or rehabilitate apartment housing, as one of the optimal resources he has.
- Carson is of the view that low-income housing tax credits will create affordable housing all over America.
- Carson also recognizes the need of various measures to prove the effectiveness of the agency he is newly handed over with. It is important since developers want more predictability from him, along with enhanced customer service.
A recently leaked draft, regarding recommendations for cutting HUD’s FY2018 budget, is causing a frenzy. The housing assistance that is provided by the U.S. Department of Housing and Urban Development (HUD) may suffer from fiscal policies that are under consideration by the Congress and the White House. These policies are expected to include a massive increase in military spending.
It is to be noted that HUD is currently providing 5 million people some kind of housing assistance, either through vouchers, public housing projects or subsidies to the landlords, making around 85 percent of the total HUD’s budget. The housing advocates have been warning the Trump Administration that deep cuts in housing budget would force many Americans out of their homes, while rental prices will become unusually high, making it more difficult for renters to make considerable savings to buy homes.
The advocates also point out that changes in the multifamily affordable lending housing budget would directly impact low-income communities. In 2013, the similar situation occurred when cuts in HUD’s budget caused over 100,000 renters to lose their housing support, nationwide.
The biggest threat to U.S. multifamily affordable housing market may not even arise from the office of Carson, but from Trump and the Republican Congress that are both skeptical regarding federal funding for a number of programs, said Diane Yentel, the President of the non-profit National Low Income Housing Coalition. The reforms in the tax code as proposed by Paul Ryan may bring changes in the Low Income Housing Tax Credit Program, which at present, is the source of providing the most affordable housing in the U.S.
While the White House is still not specific regarding its HUD plans, the budget process seems in flux and has called for a $54 billion cut in the non-military discretionary domestic plans in the next year, which is expected to radically affect the safety-net programs, as predicted by budgetary experts.
Tax reforms that are being headed by Kevin Brady and Ryan, could eventually do away with the key tax credit used by the developers to build multifamily affordable housing, or could radically curtail the use of credit.