About 125,000 individuals and families could lose their Housing Choice Voucher benefits and be at risk of becoming homeless under the widespread and indiscriminate cuts brought on by sequestration.

President Obama and Republican leaders had failed to reach an agreement Friday morning, which meant that the sequester and its approximately 5 percent cuts to government programs were officially set to go into effect sometime that day.

Although it was unknown when the pain would be felt on the streets, officials warned that it would be real.

"These reductions to HUD (Department of Housing and Urban Development) programs would be deeply destructive and would affect numerous families, individuals, and communities across the nation that rely on HUD programs," said HUD Secretary Shaun Donovan in a February letter to Sen. Barbara Mikulski (D-Md.), chair of the Appropriations Committee.

Donovan cited numerous examples of the potential cuts, including:

  • More than 100,000 formerly homeless people, including veterans, being removed from their current housing and emergency shelter programs; 
  • 75,000 fewer households receiving foreclosure prevention, pre-purchase, rental, or homeless counseling through housing counseling grants;
  • 7,300 fewer households receiving assistance through the Housing Opportunity for Persons with AIDS program;
  • 2,100 affordable homes not being built or rehabilitated by communities that receive HOME funding; and
  • Public housing agencies being forced to defer routine maintenance and repairs to public housing, leading to deteriorating living conditions and the permanent loss of units that serve 1.1 million of the nation's poorest residents.

One of the biggest threats is to the voucher program, which could be cut by as much $971 million, estimated the Center on Budget and Policy Priorities.
In an interview with NBC, Donovan stressed the risk to families that receive the rental assistance.

He also warned that $3 billion in Hurricane Sandy relief aid could be halted. That would mean more than 10,000 homes or small businesses would lose assistance, and construction workers would be put out of work.

The impact of the cuts will be felt sooner than later, according to Saul Ramirez, CEO of the National Association of Housing and Redevelopment Officials.

"Unlike other areas that would have a gradual descent, these Draconian cuts hit the most vulnerable first and most immediately," he said.

In addition to the risks to Sec. 8 voucher recipients, Ramirez cited the dangers of deferring maintenance at existing properties, which could lead to the permanent loss of some of the affordable housing stock.

Public housing authorities have been put in a state of uncertainty, according to Ramirez.

"Most of the agencies are strained and operating below optimum levels because of underfunding over the last several years," he said. "There's very little to cut before you start to hit bone. Those initial steps to cut before you hit bone are short-lived."

Local housing authorities have been taking different steps to prepare for the widespread cuts, including scaling back contracts with the private sector for different work, according to Ramirez.

Ali Solis, senior vice president of public policy and corporate affairs at Enterprise Community Partners, agreed that the cuts would hit the nation's neediest citizens.

"Sequestration will have a disproportionately painful effect on low-income people, in particular vulnerable families with children and seniors, who are served by the affordable housing and community development industry," she said.

Enterprise and other industry leaders are urging Congress to reverse the cuts. "Further deficit reduction efforts should be balanced between a mix of revenues and responsible spending cuts," Solis said.

Others warn that more trouble may be on the way.

"The arrival of sequestration is a warning of more serious crises to come unless Congress and the administration find a sustainable budgetary compromise," said Ethan Handelman, vice president for policy and advocacy at the National Housing Conference. "The sequestration cuts will have real effects for vulnerable people who depend on housing assistance, but we face much more than incremental reductions unless policymakers forge a lasting agreement on revenues and entitlements, which have far more impact than discretionary programs like housing assistance."