Billions In CRE Funding In Crosshairs Of Musk's Promised 'Pause' On U.S. Government Spending
As Elon Musk, President Donald Trump and Democrats fight a pitched battle over who controls federal funding, America’s housing providers could find themselves catching shrapnel.
Trump and Musk, the world’s richest man, have pledged to audit all government spending and cut wasteful expenses. The administration has already targeted specific initiatives, and the operators of federally funded programs and recipients of federal aid like housing vouchers are anxiously waiting to see if their funding survives.
After backing away from a bungled effort to temporarily freeze all federal funding, Musk’s Department of Government Efficiency — tasked with rooting out federal waste — has gained control over the system used to pay the government’s bills.
Musk said Sunday that the DOGE team would use the system to halt payments to some federal contractors, including Lutheran Family Services, a faith-based organization that has been aiding refugees, and the U.S. Agency for International Development, the country’s main provider of aid abroad.
“The only way to stop fraud and waste of taxpayer money is to follow the payment flows and pause suspicious transactions for review. Obviously,” Musk posted Monday on X, the social media platform he owns. “Naturally, this causes those who have been aiding, abetting and receiving fraudulent payments [to get] very upset. Too bad.”
The initial Office of Management and Budget directive was issued Jan. 27 and was set to take effect the following day. Prior to the order coming into force, and as confusion spread, some agencies reported they had lost access to payment portals.
The National Coalition for Homeless Veterans said it lost access to federal payment systems that assist veterans relying on grant money to pay rent or put down a deposit for an apartment.
The problems continued even after the Trump administration clarified that direct housing assistance payments were not meant to be targeted, NCHV CEO Kathryn Monet said in a statement. It wasn’t until U.S. District Judge Loren AliKhan blocked the funding freeze that veterans’ access was restored.
AliKhan extended the temporary restraining order Monday, but Monet said the NCHV was preparing for the funds to once again be frozen if the order is lifted.
“NCHV is concerned and encourages this Administration to do everything in its power to ensure that all vulnerable people, especially veterans facing housing instability, do not suffer at the hands of their review,” she said.
The federal government funded $67B in housing assistance in 2023, with 80% of that funding going to rental assistance programs for low-income households, according to the Peter G. Peterson Foundation.
That funding covered 4.4 million households in 2023, with $38B split between housing vouchers and public housing and $15B in direct assistance to landlords renting to low-income tenants. Federal programs distribute that aid, meaning Musk could use the Treasury payment system to freeze funding with little oversight.
DOGE, the U.S. Treasury Department, and the OMB did not respond to a request for comment.
Today’s number has increased to 22 consulting contract terminations for a total savings of ~$45mm.
— Department of Government Efficiency (@DOGE) February 4, 2025
All in today, 36 contracts were terminated for a total savings of ~$165mm across 6 agencies, including a DHS contract for “people and culture survey and climate support services.” https://t.co/ixiZxD302M
Several agencies that receive federal funding reported losing access to their accounts during the brief window between Monday, when the funding freeze was announced, and Tuesday when the order was blocked by a federal judge and eventually rescinded by OMB.
In a statement after the judge’s order, the Mortgage Bankers Association said it was continuing to urge the White House “to avoid making any moves that disrupt the flow of lending to the single-family and multifamily housing markets.”
The MBA's statement went on to say it was still pushing the Federal Housing Administration to extend a memo it released stating the cuts did not apply to single-family housing programs to include multifamily as well.
There are more than two dozen federal grant programs totaling billions of dollars in aid directly tied to housing. They include a $43B program that offers low-cost housing loans to veterans, $7.2B in funding for rural housing loans and $1.6B earmarked for rental assistance in rural areas.
In all, federal funding for just over 100 programs at the Department of Housing and Urban Development is at risk. The grants fund everything from rental assistance for persons with disabilities to programs to remove lead from homes.
HUD didn’t respond to a request for comment.
DOGE has already terminated roughly $1B worth of contracts across 25 U.S. agencies, although HUD was not among those impacted, according to an X post from the agency. It also terminated 22 leases at underutilized buildings, generating $44.6M in savings, the agency said in another post.
Musk said Tuesday that the federal government was spending roughly $15B per year on maintenance and utility costs at unused government buildings in the U.S. and abroad. He didn’t propose a plan to cut those costs, but he offered the data point in response to a social media post from Iowa’s Republican Sen. Joni Ernst.
Congressional Democrats have been railing against Musk’s broad access to the Treasury payment system and, specifically, his move to cut funding to the United States Agency for International Development. Massachusetts Sen. Elizabeth Warren sent a letter to Treasury Secretary Scott Bessent Monday demanding an explanation for why DOGE was given control over the payment system.
“It is extraordinarily dangerous to meddle with the critical systems that process trillions of dollars of transactions each year, are essential to preventing a default on federal debt, and ensure that tens of millions of Americans receive their Social Security checks, tax refunds and Medicare benefits,” Warren wrote.
— Elon Musk (@elonmusk) February 4, 2025
The limited oversight or insight into DOGE's operations have left housing advocates anxious that their projects could lose funding despite the administration's assurance that rental assistance programs wouldn't be targeted.
“The Trump administration is expected to continue pursuing policies that would withhold congressionally approved funding for various programs and argues that while the OMB memo was rescinded, freezing funds related to diversity, equity, and inclusion initiatives, foreign aid, immigration assistance, and clean energy projects will continue,” the National Low Income Housing Coalition said in a statement Friday.
By gaining control over the Treasury Department’s payment system, Musk’s team at DOGE — reportedly staffed with recent college graduates — is also empowered to block funds for HUD’s Community Development Block Grant program.
The CDBG program provides hundreds of millions of dollars in direct capital infusions to U.S. communities. In 2022 alone, the program’s funding helped more than 60,000 families with housing assistance and improved homeless shelters that serve more than 83,500 people, according to HUD.
HUD requested $3.4B in funding for the CDBG program for fiscal year 2024, $3B less than the prior year.
There are 21 active block grant programs currently receiving federal funding, according to a database of federal projects compiled by The New York Times.
Most of the grants aren’t explicitly for commercial real estate outlays, but local governments are given wide latitude for spending the awarded funds, which target initiatives for things like energy efficiency, childcare, preventative healthcare and poverty reduction. Investments in affordable housing are a common use of the funding.
Musk’s move to cut funding from Lutheran Family Services followed a social media post by Michael Flynn, a retired Army general and noted conspiracy theorist. Flynn accused the charity, which helps settle refugees in the U.S., of money laundering and posted an image of a spreadsheet detailing how federal funds flowed to the program.
Musk responded to the post, saying that the DOGE team was “rapidly shutting down these illegal payments.”
The nonprofit and its partners responded to the move with surprise, disappointment and confusion.
“To allegations that we are somehow ‘money laundering,’ please know that we are highly audited, accredited, and endorsed by the Better Business Bureau and Charity Navigator,” Lutheran Family Services said in a statement Monday.
“We have provided refugee services for 50 years, since the fall of Saigon,” the nonprofit said. “Those with refugee status are highly vetted people who came to the US at the invitation of our government. Most wait years, even decades before getting the ‘golden ticket’ of being able to come to America to rebuild their lives.”
Trump has been supportive of Musk’s moves, which align with the president’s own efforts to slash spending and dismantle federal bureaucracy. The Tesla CEO’s rising political profile has led some politicians and commentators to question whether the president has the power to rein in the billionaire’s wholesale offensive on the bureaucratic state.
The White House moved to assure the public that it was firmly in control of funding decisions Monday.
“Elon can't do, and won't do, anything without our approval,” Trump told reporters from the Oval Office. "And we'll give him the approval where appropriate. Where not appropriate, we won't."
