Trump rescinds freeze on federal grants, foreign aid

By BrokerOwner.net January 29, 2025 Housing News

The
federal
funding
freeze
has
melted.

The
Trump
administration
circulated
a
new
memo
on
Wednesday
that
rescinds
a
previous
memo
released
on
Monday
that
put
a
sweeping
funding
freeze
on
federal
grants
and
foreign
aid.

The
new
memo
—
which
is
addressed
to
federal
agencies
—
is
two
sentences
long,
one
announcing
that
the
previous
memo
is
rescinded
and
the
other
directing
any
questions
about
Trump’s
executive
orders
to
the
agency’s
general
counsel.

The
move
brings
to
a
close
a
dramatic
sequence
of
events
that
began
with
the
Monday
memo
announcing
the
funding
freeze,
which
was
to
go
into
effect
at
5
p.m.
ET
on
Tuesday.
But
before
the
start
time,
a
federal
judge
put
a
temporary
hold
on
the
new
directive
with
a
ruling
on
a
lawsuit
brought
by
multiple
nonprofits.

But
the
memo
on
federal
grants
and
foreign
aid
is
just
one
piece
of
the
memo
puzzle.
Tuesday
morning
the
administration
circulated

a
second
memo
that
directed
federal
agencies
to
review
selected
programs
and
submit
their
findings
to
the

Office
of
Management
and
Budget
by
Feb.
7,
and
this
memo
still
stands.

The
programs
targeted
by
the
memo
include
100
administered
by
the

Department
of
Housing
and
Urban
Development
(HUD),
including
rental
assistance,
Section
8
housing
vouchers,
the
public
housing
capital
and
operating
funds,
Community
Development
Block
Grants
(CDBG),
the
Choice
Neighborhoods
program
and
Project
Base
Rental
Assistance.

HUD’s
HOME
and
CDBG
initiatives
would
comprise
the
majority
of
programs
affected,
as
469
programs
rely
on
HOME
funding
and
265
programs
rely
on
CDBG
funding.
It
also
targeted
programs
on

mortgage
insurance
and

manufactured
housing.

Given
the
scope
of
the
HUD
programs
listed,
it
effectively
called
for
a
review
of
HUD
in
its
entirety.
Notably
missing
is
the

Department
of
Treasury’s

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.

The
memo
set
off
panic
and
confusion
across
multiple
industries,
which
prompted
the
administration
to
release
a
followup
memo
intended
to
clarify
the
previous
one.

Formatted
as
a
question
and
answer,
the
damage
control
memo
stated
that
it
establishes
a
process
for
agencies
to
“quickly
determine
whether
any
program
is
inconsistent
with”
Trump’s
previous
executive
orders,
and
that
a
pause
could
be
as
short
as
a
day.
The
memo
explicitly
stated
that
rental
assistance
would
not
be
paused.

However,
language
later
in
the
memo
seemed
to
suggest
that
the
original
memo
was
intended
as
a
funding
pause
deemed
necessary
“to
act
as
faithful
stewards
of
taxpayer
money.

In
the
eyes
of
many
stakeholders,
the
followup
memo
did
little
to
clear
things
up.
In
a
contentious
press
conference
Tuesday
afternoon,
White
House
Press
Secretary
Karoline
Leavitt
reiterated
that
many
assistance
programs
are
not
subject
to
a
pause.
She
added
that
there’s
no
uncertainty
“in
this
building”
and
that
the
uncertainty
is
only
among
members
of
“the
media.”

But
many
in
the
housing
industry
expressed
confusion
over
the
memos,
with
some
stating
that
they
oppose
a
freeze
on
funding.

“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.”

Down
Payment
Resource
(DPR),
which
connects
eligible
homebuyers
and
hard-to-find

down
payment
programs,
estimates
that
if
the
Tuesday
morning
memo
were
to
be
enforced,
roughly
one-third
of
the
nation’s
2,466
U.S.
homebuyer
assistance
programs
would
be
frozen.

“The
full
impact
this
will
have
on
the
availability
of
federally-funded
homebuyer
assistance
programs
is
unclear,
and
some
administrators
who
accept
federal
funding
have
paused
associated
assistance
programs
and
educational
workshops,”
a
spokesperson
from
DPR
shared
in
an
email.

HUD’s
HOME
and
CDBG
initiatives
would
comprise
the
majority
of
programs
affected,
as
469
programs
rely
on
HOME
funding
and
265
programs
rely
on
CDBG
funding.
Major
programs
with
HUD
also
include
the
public
housing
operating
and
capital
funds,
Section
8
housing
vouchers,
the
Choice
Neighborhoods
program
and
Project
Based
Rental
Assistance.

In
response
to
the
Monday
memo
that
was
rescinded
today,

Mortgage
Bankers
Association
(MBA)
President
and
CEO
Bob
Broeksmit
released
a
statement
Tuesday
saying
the

Federal
Housing
Administration
(FHA),

Department
of
Veterans
Affairs
(VA)
and
the

Department
of
Agriculture
(USDA)
“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.”