Last week the White House released “Delivering Government Solutions in the 21st Century: Reform Plan and Reorganization Recommendations.” The reform plan proposed the following structural changes that would greatly impact the affordable housing industry:
- Move USDA’s Rural Housing Loan Guarantee and Rental Assistance Programs to HUD. This will cause USDA housing programs to ultimately compete with Section 8 and other large HUD programs for funding.
- End Conservatorship of GSEs, Fannie Mae and Freddie Mac, both of which have been under conservatorship since the financial crisis. This will reduce their role in the secondary mortgage market, create an explicit federal guarantee for catastrophic circumstances for mortgage-backed securities (MBS), and transfer the responsibility for meeting affordable housing objectives supporting low and moderate income home-buyers to HUD.
- Establish a permanent Council on Public Assistance, composed of HUD and other agencies that administer public benefit programs. This proposed Council would have statutory authority to set cross-program policies including uniform work requirements.
- Move the Community Development Block Grant (CDBG) Program into a new “Bureau of Economic Growth” within the Department of Commerce.
Some of the proposals would require Congressional legislative action and the Financial Services Committee will likely use the HUD Oversight hearing on Wednesday to question Sec. Carson about these organizational reform proposals and how they may correlate with his agency’s harsh legislative proposal released earlier this year that sought to raise tenant rents and impose work requirements. Stay tuned for further updates.