Deep staffing cuts at the U.S. Department of Housing and Urban Development (HUD) could derail a federal agency that issues mortgage insurance for hundreds of thousands of homebuyers. The Trump administration has recommended shedding more than 40% of the staff of HUD’s Office of Housing, whose largest agency is the Federal Housing Administration (FHA). The FHA provides mortgage insurance for single-family homes and other properties, and in fiscal year 2024 alone it insured more that 498,000 first-time homebuyers, many of whom would not be able to afford their mortgages otherwise. The FHA generates billions of dollars to the federal government each year through what is known as a negative credit subsidy. Guarantees for hundreds of billions of dollars in new home loans will put more than $4.4 billion back into the federal budget, not the other way around. Slashing nearly half the staff of the agency could impede its ability to effectively underwrite loans and result in diminishing returns for the FHA and consequences for buyers, lenders and tenants across the country.
Source: CityLab Daily; 2/19/2025