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Housing Secretary Marcia Fudge, who was chosen by President Biden at the height of the pandemic as the second Black woman to run the Department of Housing and Urban Development, has resigned her position and will step down March 22.
News of Fudge’s resignation broke Monday, the same day the Biden administration rolled out a $7.3 billion budget proposal that would provide $258 billion to expand access to affordable housing.
But the budget proposal, which would fund tax credits for first-time homebuyers and several other housing initiatives Biden announced in a State of the Union address last week, is only a starting point for discussion since Congress must approve it.
Fudge told USA Today, which broke the news of her resignation, that affordable housing should be a focus for Democrats and Republicans alike, but that HUD needs more funding.
There’s a $70 billion need to improve public and multifamily housing, she said, but Congress provided just $3 billion. Permanent funding for disaster recovery is another unmet need, Fudge said.
Marcia Fudge
“We’re making incremental changes, but we need to make bigger changes and we need to make them faster,’’ Fudge told USA Today. “We’re doing everything we can with the resources we’ve got.”
HUD Deputy Secretary Adrianne Todman will serve as the acting secretary until President Biden nominates Fudge’s replacement, The White House said.
“Under Marcia’s transformational leadership, we have worked hard to lower housing costs and increase supply,” Biden said in a statement. “We’ve proposed the largest investment in affordable housing in U.S. history. We’ve taken steps to aggressively combat racial discrimination in housing by ensuring home appraisals are more fair and by strengthening programs to redress the negative impacts of redlining.”
In his State of the Union Address Thursday, Biden called on Congress to approve a $10,000 tax credit for first-time homebuyers and people who sell their starter homes and to provide funding to build and renovate more than 2 million homes.
Biden made a case for his proposed budget Monday at a campaign stop in Goffstown, New Hampshire, and The White House provided cost breakdowns of his proposed housing initiatives, which include:
- Building or preserving more than 400,000 starter homes by creating a Neighborhood Homes Tax Credit at a cost of $19 billion over 10 years.
- Providing down payment assistance to an estimated 400,000 homebuyers by earmarking $10 billion for an assistance program for first-time homebuyers whose parents do not own a home and who are at or below 120 percent of the area median income (140 percent in high-cost areas).
- Providing $20 billion in competitive grants to allow state and local jurisdictions to incentivize construction of multifamily developments, including commercial-to-residential conversions and projects near transit and other community amenities.
- Building or preserving 1.2 million affordable rental units by providing $37 billion to expand the Low-Income Housing Tax Credit (LIHTC), reducing the private activity bond financing requirement to 25 percent, and repealing the qualified contract provision and right of first refusal provision that lets some landlords out of affordable rent requirements.
- Providing a one-time $7.5 billion investment to address the capital needs of more than 100,000 distressed public housing properties nationwide.
- Attracting development capital for the creation of new affordable homes by providing $7.5 billion in funding for Project-Based Rental Assistance (PBRA) contracts, long-term contracts with private for-profit or non-profit owners to rent new affordable housing units.
Lawmakers tend to pay little heed to White House budget proposals in the modern era, and Congress may refuse to fund any of the Biden administration’s housing initiatives.
“None of the White House’s tax proposals will become law,” BTIG’s Director of Policy Research Isaac Boltansky predicted in a March 8 analysis.
In his State of the Union address, Biden put forward “a befuddling number of demand-side tax proposals even though the country is suffering from a housing supply crisis,” Boltansky wrote.
The proposed tax credit for families who sell their starter homes, for example, “is intended to increase supply, but one would assume that most of those individuals selling their homes would become buyers,” Boltansky noted. “This proposal has no viable path to passage during this Congress.”
A Biden administration proposal to let Fannie Mae and Freddie Mac waive title insurance requirements on some mortgage refinancings does not require Congressional approval.
The new title pilot program “is a concerning headline for the title industry, but it is important to recognize that it is a narrow pilot focused on low-risk refinancings,” Boltansky wrote.
Boltansky predicted that the Biden administration’s focus on reducing closing costs “will continue, especially as the president heads on to the campaign trail.”
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