WASHINGTON, D.C. — The U.S. Department of Housing and Urban Development is appealing a federal court ruling that temporarily blocks the agency from changing how billions of dollars in federal homelessness grants are awarded.
What This Means for You
- Homelessness Funding Dispute Continues: A court order is currently preventing HUD from implementing changes to a major federal homelessness program.
- Billions in Grants at Issue: The case affects about $3.9 billion in federal funding distributed through local homelessness programs.
- Policy Direction Could Shift: The appeal could determine whether the federal government can change how homelessness programs are funded.
The Department of Justice filed the appeal on HUD’s behalf after a federal district court in Rhode Island issued a preliminary injunction — a temporary court order that pauses a policy while a lawsuit proceeds.
The injunction blocks HUD from implementing new funding policies tied to its Continuum of Care program, the federal government’s primary system for distributing homelessness assistance grants.
Dispute Centers on Federal Homelessness Policy
The Continuum of Care program provides funding to local governments and nonprofit organizations that deliver housing and services for people experiencing homelessness.
HUD announced changes to the program in November 2025 through its annual Notice of Funding Opportunity, which outlines how organizations can apply for federal grants.
The agency said the revised policy would focus funding on programs that help people move toward self-sufficiency rather than long-term dependency on housing assistance.
HUD said the changes were also intended to address issues such as unsafe encampments, drug activity, and registered sex offenders living in some homeless camps.
Deputy Secretary Andrew Hughes said the administration believes the changes are needed to improve outcomes.
“President Trump and Secretary Turner vowed a drastic paradigm shift in how America addresses homelessness,” Hughes said. “HUD is doubling down for real solutions to this catastrophe and will continue to pursue every legal avenue to reform the homelessness system within the bounds of the law.”
Lawsuit Filed by States and Advocacy Groups
Twenty-one states, the District of Columbia, several local governments, and advocacy groups filed a lawsuit challenging the policy changes.
The plaintiffs argued the federal government improperly altered the rules governing homelessness grants.
The court’s preliminary injunction temporarily blocks HUD from enforcing the new funding conditions while the case moves forward.
HUD officials say the ruling prevents the agency from revising grant requirements and selecting projects under the updated criteria.
Funding Program Distributes Billions Nationwide
HUD’s Continuum of Care program distributes billions of dollars each year to local housing agencies and nonprofit service providers.
For fiscal year 2025, the program includes about $3.9 billion in federal funding for housing and support services for people experiencing homelessness.
According to HUD, the funding is intended to support housing programs alongside services designed to help individuals transition into stable living situations.
Next Steps in the Legal Challenge
By appealing the injunction, federal officials are asking a higher court to allow the policy changes to take effect while the broader lawsuit continues.
HUD officials said the appeal is intended to allow the agency to move forward with its planned reforms while ensuring federal homelessness funding is distributed according to the new guidelines.
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