The federal government has canceled roughly $60M in Section 4 funding for two prominent affordable housing firms in a move that the organizations say will have significant consequences for Americans struggling to find low-cost housing.

The Department of Housing and Urban Development notified New York City-based Local Initiatives Support Corp. and Maryland-based Enterprise Community Partners late last week that it was terminating its contracts with the organizations for Section 4 funding, previously approved projects and all planned engagements, the organizations said.

“Last week’s cancellation of HUD’s capacity-building grants to nonprofit developers and other groups strikes a severe blow at the nation’s infrastructure for creating affordable homes and, if sustained, will damage local economies for years to come,” LISC said in a statement this week.

A HUD spokesperson didn’t immediately respond to Bisnow’s request for comment on Friday, but a spokesperson told Multifamily Dive that the late February decisions to cancel contracts with Enterprise and LISC followed “direction from the administration.”

“The Department is reviewing and consolidating contracts,” a HUD spokesperson told Multifamily Dive. “HUD will continue to distribute the remaining funding and deliver on statutory responsibilities. Delivery of services will not slow down. Importantly, HUD will continue to support community development and affordable housing activities that benefit low-income individuals.”

Section 4 funding, otherwise known as the Capacity Building for Affordable Housing and Community Development Program, supplies grants that support housing and community development for low-to-moderate-income households. It was created in Section 4 of the 1993 HUD Demonstration Act, Multifamily Dive reported.

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