Donald Trump Family's FHA-financed Housing Construction Firm Revisited

Much of the wealth that ultra-rich celebrity deal-maker and 2016 Republican Party presidential candidate Donald Trump inherited from his father, Fred Trump {II}, was apparently obtained during the late 1930's and 1940's from a Trump housing construction firm that was financed by the public funds of the U.S. government's Federal Housing Administration [FHA]. As former Village Voice reporter Wayne Barrett's 1992 book, Trump: The Deals and The Downfall, recalled:

"The financing of Trump's Depression-era housing came from the...Federal Housing Administration [FHA]...By the beginning of 1941...Fred Trump...was beginning to move his base of operations out toward the eastern shore of Brooklyn, buying up valuable tracts in Brighton Beach and Bensonhurst. He announced the development of 200 homes a block from the beach in Brighton and the purchase of a pivotal 50-acre track near Bensonhurst Park right off the Belt Parkway, where he planned another 700 houses...

"The war...brought a shutdown of FHA funding for housing in Brooklyn, forcing Trump to suspend his...Bensonhurst project and sending him off to Norfolk, Virginia, and Chester, Pennsylvania, to build FHA-backed housing hear shipyards for naval officers and related uses...He moved his base of operations to Virginia...In addition to the project Fred built...he became an investor in other Norfolk ventures and bought some outright over the years. He would remain active in the Norfolk area into the seventies, accumulating an estimated 2,400 units at his peak, traveling back and forth from New York on a regular basis...Though Fred prospered in Virginia, he shifted his focus back to Brooklyn by late 1944...

"...Between late 1944 and January of 1945, he bought 3 vast plots of land, putting together a 40-acre site. He got one parcel directly from the City. The other two were in tax arrears, and he snatched them before the City could take them, getting them cheaply and assuming the tax bill. His political connections helped keep him one step ahead of the tax man...

"...Trump's plan called for 1,344 apartments...right off the Belt Parkway and overlooking the bay...The FHA commitment to the plan of $9.1 million was divided into 3 equal parts to avoid the $5 million legal limits on project financing...

"Shore Haven was a dramatic change for the 2-story neighborhood, requiring all sorts of City zoning, sewer and street support...By the time Shore Haven was completed Trump's FHA mortgage was increased to $10.4 million, and his own claimed construction cost was raised to $9.5 million...In addition to his fee as a builder, Fred [Trump] managed to take a $1.6 million profit out of the mortgage proceeds..."

Donald Trump Father's Senate Banking Committee Subpoena and FHA Scandal Revisited

The father of 2016 Republican Party presidential candidate Donald Trump--Fred Trump [II]--was, coincidentally, subpoenaed to testify before the U.S. Senate Banking Committee in 1954, when that committee was investigating how Federal Housing Administration [FHA]-financed builders and real estate developers apparently made windfall profits from FHA mortgage gouging during the 1940's and early 1950's. As former Village Voice reporter Wayne Barrett's 1992 book, Trump: The Deals and The Downfall, recalled:

"...By the time the...Federal Housing Administration [FHA[ Scandal finally receded in 1956, the Senate Banking Committee had likened it to Teapot Dome...The description proved apt when $51 million [equivalent to around $450 million in 2015 dollars] in mortgage gouging was identified during an FBI random survey of 285 projects.

"Fred Trump was subpoenaed before the [U.S. Senate] Banking Committee in July of 1954 and grilled about the millions in profit he had expropriated from Beach Haven...Questioned by the committee's counsel, William Simon, Trump conceded he'd paid only $180,000 underlying Beach Haven, but got the FHA to put an appraised value without improvement, of $1.5 million on it. He then gave the land to a trust in his children's name and, using the inflated value, charged the Beach Haven project $60,000 a year rent for the land for 99 years...

"Simon moved on to the windfall Trump took on the mortgage proceeds. The committee had established that Fred [Trump] had loaned $729,000 of the excess proceeds from the mortgage to affiliated corporations and kept another $3 million in the bank. This excess, which Trump acknowledged was actually over $4 million on a $16 million mortgage, was the difference between the amount he originally obtained through FHA, based on his pre-construction estimates, and the actual cost of construction. Trump conceded that he'd paid no taxes on the proceeds he was keeping and that he'd invested some of them already...

"...The [U.S. Senate] Banking Committee and FHA findings assailed the inflated cost estimates that had enriched Fred [Trump] and dozens of other builders as `outright misrepresentation.' The final report charged that the developers had `saddled tenants with the burden of meeting not only legitimate costs' but paying rents to cover the unexpended portion of the federal loans that the builders had pocketed. The investigators also condemned the `fictional division of single projects into two or more projects' to sidestep the $5 million limit on insurable mortgages, a tactic Fred [Trump] employed at both Shore Haven and Beach Haven...

"...Fred [Trump] was...threatened with a federal takeover of Shore Haven, where the Beach Haven mortgage scams exposed at the hearings had been tried first..."

Donald Trump Family's FHA-financed Housing Construction Firm Revisited

Much of the wealth that ultra-rich celebrity deal-maker and 2016 Republican Party presidential candidate Donald Trump inherited from his father, Fred Trump {II}, was apparently obtained during the late 1930's and 1940's from a Trump housing construction firm that was financed by the public funds of the U.S. government's Federal Housing Administration [FHA]. As former Village Voice reporter Wayne Barrett's 1992 book, Trump: The Deals and The Downfall, recalled:

"The financing of Trump's Depression-era housing came from the...Federal Housing Administration [FHA]...By the beginning of 1941...Fred Trump...was beginning to move his base of operations out toward the eastern shore of Brooklyn, buying up valuable tracts in Brighton Beach and Bensonhurst. He announced the development of 200 homes a block from the beach in Brighton and the purchase of a pivotal 50-acre track near Bensonhurst Park right off the Belt Parkway, where he planned another 700 houses...

"The war...brought a shutdown of FHA funding for housing in Brooklyn, forcing Trump to suspend his...Bensonhurst project and sending him off to Norfolk, Virginia, and Chester, Pennsylvania, to build FHA-backed housing hear shipyards for naval officers and related uses...He moved his base of operations to Virginia...In addition to the project Fred built...he became an investor in other Norfolk ventures and bought some outright over the years. He would remain active in the Norfolk area into the seventies, accumulating an estimated 2,400 units at his peak, traveling back and forth from New York on a regular basis...Though Fred prospered in Virginia, he shifted his focus back to Brooklyn by late 1944...

"...Between late 1944 and January of 1945, he bought 3 vast plots of land, putting together a 40-acre site. He got one parcel directly from the City. The other two were in tax arrears, and he snatched them before the City could take them, getting them cheaply and assuming the tax bill. His political connections helped keep him one step ahead of the tax man...

"...Trump's plan called for 1,344 apartments...right off the Belt Parkway and overlooking the bay...The FHA commitment to the plan of $9.1 million was divided into 3 equal parts to avoid the $5 million legal limite on project financing...

"Shore Haven was a dramatic change for the 2-story neighborhood, requiring all sorts of City zoning, sewer and street support...By the time Shore Haven was completed Trump's FHA mortgage was increased to $10.4 million, and his own claimed construction cost was raised to $9.5 million...In addition to his fee as a builder, Fred [Trump] managed to take a $1.6 million profit out of the mortgage proceeds..."