A so-called “funding freeze” ordered on short notice by the new Trump administration was withdrawn almost as quickly as it was released, but the broad-based directive has caused significant confusion across the housing industry, and raised questions about how the new administration will seek to implement its agenda on housing.
The original memo, dated Monday and coming from the Office of Management and Budget (OMB), was brief and provides little detail, but said that “Federal agencies must temporarily pause (emphasis original) all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated (by recent executive orders).”
Those executive orders are specifically ones targeting diversity, gender identity, immigration, energy and the environment. Multiple lawsuits were filed by private groups as well as state Attorneys General in the hours after the memo was circulated, and a federal judge had paused implementation of the order until next Monday.
But by Wednesday afternoon, multiple media outlets reported that the administration had chosen to rescind the order, without offering any details as to why or what the next steps would be. At the same time, White House Press Secretary Karoline Leavitt said on Twitter (now known as X) that the freeze was still in effect.
Although it remains unclear whether the “funding freeze” is still imminent, the threat of such a wide-ranging and sudden cut-off across numerous agencies has sent housing advocates scrambling. With the Trump administration not immediately providing details, and with a deadline of 5 p.m. Eastern time yesterday to implement the freeze, housing stakeholders were scrambling for answers. Mortgage Bankers Association (MBA) CEO Bob Broeksmit released a public statement on Tuesday asking how the pause will affect homebuyers, sellers and lenders who are currently in the process of transacting.
“Americans are going to the closing table tomorrow and deserve to know that their loan will close on their home purchase. 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,” he wrote.
In response to emailed inquiries from RISMedia, MBA VP of Communications Adam DeSanctis said that FHA, Ginnie Mae and the Veteran’s Administration later clarified that “operations will continue unaffected.”
The National Association of REALTORS® (NAR) wrote Wednesday morning in a release that it also had received some clarity, but was “still assessing” the status of programs such as FEMA disaster relief and fair housing grants, noting that the memo “faces legal challenges” and has brought up “constitutional concerns over separation of powers.”
“NAR is actively working with Congress, agency officials, and industry partners to assess the impact on real estate programs and will provide members with updates as legal proceedings continue,” the statement said.
In a statement posted on its website, the National Association of Home Builders wrote Tuesday evening that it was “working to clarify the OMB statement,” but had “received assurances from the White House and agencies that housing programs are not the intended target of the pause.”
The Trump administration eventually issued an update on the order Tuesday night, saying that many programs would not be affected—specifically that “funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused.”
But doubts and confusion continued, with some Head Start programs (which fund preschools for low-income families) reporting they had temporarily lost access to federal funds. The Department of Housing and Urban Development (HUD) later released a statement that specific rental assistance programs would not be disrupted.
In a statement shared with RISMedia before the order was withdrawn, Rob Chrane, founder CEO of proptech company Down Payment Resource, said that some housing program administrators who accept federal funding had already paused programming and workshops as of early Wednesday. Down Payment Resource estimated that roughly one-third of all homebuyer assistance programs would be impacted by the order.
“There is a housing affordability crisis, and we must use every tool available to address it. (Down payment assistance) programs are a critical resource that help many hardworking Americans achieve the American Dream,” Chrane wrote.
While the White House had said the order was intended to ensure federal dollars weren’t funding programs that administration is attempting to dismantle through executive orders, that effort seemingly would include housing priorities, along with other federal programs that real estate professionals utilize. A list of the federal programs being scrutinized by the administration published by the New York Times include housing counseling programs, funds to support manufactured homes, reverse mortgage insurance, disabled veteran housing and small business loans—including the popular 7(a) program supported by NAR.
Other programs not specifically named include state-run downpayment assistance or first-time homebuyer grants, which often utilize federal funds.
John King, a loan officer affiliated with Summit Funding in California, said on LinkedIn before the order was reversed that he was “very concerned” about USDA programs and loans, noting that the USDA is affected by government shutdowns and its funding mechanisms are “temperamental.”
King added that he was also “very nervous” about smaller programs that are specifically targeted at individual counties or cities.
“I’m sure every attorney in every single department across the federal government didn’t sleep last night as they’re working to figure out—what does this legally mean?” he said.
According to multiple media outlets, acting head of the OMB, Matthew Vaeth told agency heads in his directive withdrawing the original memo that “(i)f you have questions about implementing the President’s executive orders, please contact your agency general counsel.”
Editor’s note: this story was updated at 1:55 p.m. eastern time following the withdrawal of the original OMB memo, and again at 2:11 p.m. with additional information.
