NCSHA Washington Report | January 31, 2025

On Monday evening, the White House Office of Management and Budget directed federal agencies to “pause all activities related to obligation or disbursement of all Federal financial assistance,” ostensibly freezing trillions of dollars in grants, loans, and other assistance already appropriated by Congress.

The administration spent much of Tuesday trying to characterize the announcement in somewhat narrower terms, saying, for example, that it didn’t apply to programs that provide “direct benefits to Americans,” such as Social Security, Medicare, Medicaid, and “rental assistance.” A series of subsequent notices said FHA single-family mortgage insurance, “Ginnie Mae activities,” and multifamily project-based rental assistance also were excluded from the directive. (FHA multifamily insurance was not explicitly excluded.)

By the end of the day, a federal judge in Washington, DC, had temporarily blocked the OMB order in response to a lawsuit filed by several nonprofit groups.

On Wednesday, the White House rescinded the directive, but then a statement from White House press secretary Karoline Leavitt said that was “NOT a recission of the federal funding freeze” but rather “simply a recission of the OMB memo.” Shortly afterward, a federal judge in Rhode Island, considering a lawsuit filed by 23 state attorneys general seeking to block the attempted freeze, called Leavitt’s statement “a distinction without a difference” from the original OMB memo and asked the plaintiffs “to draft an order that would protect states and organizations that rely on federal funding from having it cut off.”

Still with me?

This morning, Politico reported that, “inside the federal agencies affected by the confusing guidance from the White House, the chaos has not abated.” Senators Warren (D-MA) and Smith (D-MN) have written HUD and the White House asking whether OMB plans to issue an additional clarification, and “if so, how will this memo affect HUD programs?” State HFAs report to us that the federal systems they utilize are operating smoothly.

The author of the original OMB notice is apparently Mark Paoletta, whom the president has nominated to be general counsel in the office, the same job he had during Trump’s first term. During that time, Paoletta drafted two memos that “appear to defend an across-the-board presidential power to refuse to spend funds.” The man the Senate Budget Committee approved Thursday — all Republicans voted in favor and all Democrats boycotted the vote — to be Paoletta’s boss as head of OMB, Russell Vought, told the committee he shares with his boss, President Trump, the view that a 1970s law restricting the ability of presidents to “impound” — not spend — appropriated funds is unconstitutional.

That’s why many observers expect OMB will come back soon enough with another attempt to achieve the broad goal of Monday’s memo.

Briefing reporters way back on Tuesday, Leavitt suggested federal agencies go directly to Vought (even though he isn’t yet Senate-confirmed as OMB director) “if they feel programs are necessary and in line with the president’s agenda.” Advocates for those programs are probably well advised to follow the same advice and flood the zone with evidence of tangible benefit and constituent support that ensures their continuation consistent with congressional intent.

Stockton Williams | Executive Director

In This Issue

• NCSHA Welcomes New Members
• Bryan Appointed CHFA Executive Director and CEO
• OMB Orders, Rescinds Temporary Pause of Federal Financial Assistance
• Trump Administration Delays Effective Date of New HOME Final Rule
• Bessent Confirmed, Sworn in as Treasury Secretary
• Senate Banking Chair Announces Special Issue Working Groups
• House Republicans Convene to Discuss Tax, Spending Options
• Looking Ahead

NCSHA Welcomes New Members
NCSHA welcomed these organizations as Affiliate members in January: HAI Group and Related Affordable Management. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.

Bryan Appointed CHFA Executive Director and CEO
The Board of Directors of the Colorado Housing and Finance Authority (CHFA) has appointed Thomas Bryan as executive director and CEO, effective March 1. Bryan has served as CHFA’s chief financial officer since 2019 and previously as controller/director of accounting. Before coming to CHFA, Bryan was the controller and deputy finance director for the City of Centennial, accounting manager for the Town of Parker, and a senior accountant for FirstBank Holding Company.

Bryan will succeed Cris White, who will retire on February 28 after 15 years as executive director and CEO and more than 35 years at CHFA. White also served as a member of NCSHA’s Board of Directors. We thank Cris and wish him all the best in his next chapter!

OMB Orders, Rescinds Temporary Pause of Federal Financial Assistance
After issuing an order to pause temporarily all federal financial assistance beginning at 5:00 pm on Tuesday, January 28, the Office of Management and Budget rescinded that order in a subsequent memorandum issued a day later, on Wednesday, January 29. In the interim, the U.S. Department of Housing and Urban Development (HUD) took steps to comply with the order, such as suspending access to the Line of Credit Control System (LOCCS), its grant disbursement system, affecting numerous stakeholders, including state housing finance agencies. Access to LOCCS has been restored, and to the extent they were disrupted, other HUD operations appear to have returned to normal, although there remains ongoing uncertainty regarding potential future review of HUD programs by the Trump Administration, the impact of recent White House executive orders, and ongoing litigation related to the temporary funding freeze.

Trump Administration Delays Effective Date of New HOME Final Rule
Pursuant to an order issued on January 20 requiring agencies to freeze and review new or pending regulatory actions, HUD has announced the effective date of the HOME Final Rule, scheduled previously for February 5, will be delayed until April 20. The delay allows the new administration to review the rule for “any questions of fact, law, and policy,” as directed by the January 20 memorandum. Depending on the outcome of that review, the rule could be allowed to go into effect on April 20 or could be subject to further delay beyond that date.

Bessent Confirmed, Sworn in as Treasury Secretary
Treasury Secretary Scott Bessent was sworn in January 28, a day after the U.S. Senate confirmed him with a 68 – 29 vote, including support from 16 Democrats. A seasoned investor and founder of Key Square Capital Management, Bessent is set to manage the nation’s $28 trillion Treasury debt market and oversee fiscal and tax policy, financial regulations, and international sanctions. During his confirmation hearing, Bessent acknowledged the nation’s housing shortage, stating in his opening remarks it is one of the reasons many Americans feel the American dream is slipping away. He also highlighted his experience as a financial services analyst when discussing the role of Community Development Financial Institutions in expanding access to capital for underserved communities, emphasizing their importance in helping more Americans achieve homeownership.

Senate Banking Chair Announces Special Issue Working Groups
Senate Banking Committee Chair Tim Scott (R-SC) on Tuesday announced the formation of three special working groups to examine specific issues under the committee’s jurisdiction. Scott said he was forming the working groups to ensure the committee takes action on critical issues he believes it has neglected. One working group will focus on long-term reauthorization of the National Flood Insurance Program and be co-led by Senators John Kennedy (R-LA) and Mike Rounds (R-SD). Senator Thom Tillis (R-NC) will lead a working group on reforming federal financial regulations. Senator Bill Hagerty (R-TN) will chair a working group on protecting investors.

NCSHA will look to engage with the working groups on topics impacting HFA programs

House Republicans Convene to Discuss Tax, Spending Options
This week, House Republicans assembled in Miami for a retreat with President Trump to hammer out an agreement on moving forward with a budget resolution that would pave the way to advance the president’s priorities, including spending reductions, enhanced border security, and tax cuts, using the budget reconciliation process. Reconciliation — a two-step process that requires congressional passage of a budget resolution followed by passage of a reconciliation bill or bills — allows the party in control of Congress to circumvent the Senate filibuster, meaning legislation can advance with a bare majority on a party-line vote.

While House leaders do not yet have all aspects of the budget resolution finalized, they left the retreat with commitments from various committee leaders to achieve budgetary savings from programs under their jurisdictions and a continued plan to advance a single consolidated reconciliation bill. While House Speaker Mike Johnson (R-LA) has laid out an ambitious schedule — finalizing a budget resolution by February 10, moving and passing the budget resolution on the House floor the week of February 10 and in the Senate the following week, and final passage of the budget resolution by the end of February, followed by committee consideration of reconciliation legislation in March and final passage of the consolidated bill in April — adhering to such a schedule will be challenging with a very slim majority and continued disagreement on the details among House Republicans.

Meanwhile Senate Majority Leader John Thune (R-SD) has said the Senate is prepared to move a “Plan B” budget resolution that would tee up a two-bill approach. Under the Senate’s preferred approach, Congress would first pass reconciliation legislation focused on border security, immigration, and energy policy, followed by a tax bill later in the year.

Looking Ahead

Legislative and Regulatory Activities

• January 31 | Comments Due to NCSHA | Notice of Partial Claim Electronic Delivery Alternative Demonstration
• February 3 | Comments Due | Notice of Partial Claim Electronic Delivery Alternative Demonstration
• February 3 | Comments Due | FHFA Proposed Rule on FHLB Governance
• February 14 | Comments Due to NCSHA | HUD Request for Information on Resilience Measures and Insurance Coverage
• February 21 | Comments Due to NCSHA | Establishment of the Optional Reimbursement Claim Alternative
• February 21 | Comments Due to NCSHA | Partial Claim Document Recording and Payoff Statements
• February 28 | Comments Due | HUD Request for Information on Resilience Measures and Insurance Coverage

NCSHA, State HFA, and Industry Events

• February 10 | Early-Bird Registration Ends: NCSHA’s 2025 Legislative Conference | Washington, DC
• February 11 | National Housing Conference: “Federal Home Loan Banks: Shaping the Future of Affordable Housing and Community Investment” | Washington, DC, and Virtual
  Stockton Williams will speak at this event.
• February 11 | 2025 National Conference of Regions | Washington, DC
  Robert Henson will participate in this event.
• March 10 – 12 | NCSHA’s 2025 Legislative Conference | Washington, DC