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2017 Housing Outlook – New Policy Developments - Part 2

The Budget
Here we have a bit more to work with, as the administration's proposed budget has been published. A proposed budget is not a budget, of course. The actual budget will be produced by Congress, and even with the administration party in control of both houses of Congress, extensive changes are likely. Still, the budget proposal does give a look at what the administration's housing policy will look like, and what it looks like is a landscape of extensive cuts.

HUD's budget overall would be cut by 17%, or $7.7 billion, with up to 250,000 people potentially losing Housing Choice vouchers supporting their rent and mortgage payments and a complete elimination of Community Development Block Grants that support many local and state housing assistance programs. The Single Family Housing Direct Loan program, a Dept. of Agriculture initiative supporting affordable rural housing, would also be eliminated. The Low Income Energy Assistance Program and Weatherization Assistance Program, both of which reduced the impact of utility bills on the housing expenses of low-income participants, are set to be eliminated. Several other HUD and other housing-related programs could face elimination or significant reductions in their budget.

Again, these are proposals, and the more radical cuts may have been proposed intentionally with the expectation that Congress will restore some or all of what's cut. The overall direction is clear, though. The administration wants a substantial decrease in funding for programs supporting affordable housing. Whether Congress will share that objective remains to be seen.

What Might Change?
Let's use the Final Rule for the Home Equity Conversion Mortgage (HECM) program, which a lot of folks have been eagerly waiting on, as an example. The HECM program is set to take effect on September 19th of this year. If you are unfamiliar with the term, the HECM is a form of reverse mortgage, insured by the Federal Housing Administration (FHA). It allows seniors to convert their home equity into cash. Several significant changes to the HECM program have been implemented. The Final Rule codified these changes, along with making additional regulatory changes. These additional program changes included new origination and servicing policies. The big question is: Will programs like the HECM still receive the required funding? The only real answer: It's too early to tell. This answer comes up over and over again in this discussion, and only time will reveal how most of the issues will play out.

Final Word
If HUD's budget is cut, housing programs might not have the finances they need. This possibility might sound scary, and it could well be! But on the other side of the equation, remember Senator Carson's statement promising that critical assistance programs will not be cut. His words may mean there will be adequate replacements organized for any programs that are getting the axe. But what a "proper replacement" means has yet to be defined.

So many mixed messages, right? Your best bet is to take a breath, sit back, and see what happens. You don't want to ignore the situation, but you don't want to panic either because there's a whole lot that has to be worked out before anything is final. If you might be affected by the proposed cuts, or if you have strong opinions on the subject, contacting your elected representatives is always a good step!