A federal judge has stepped in to stop sudden changes to homeless funding rules introduced by the U.S. Department of Housing and Urban Development, after states and local governments warned the shift could force thousands of people back into homelessness.
The case, led by Washington state and joined by other states and nonprofit groups, argued HUD’s new requirements were issued too late, clashed with existing federal guidance, and weren’t authorized by Congress. The court agreed, freezing the changes before they could take effect.
Washington Attorney General Bob Ferguson said the changes would have created administrative chaos and left critical housing programs without funding. His office called HUD’s move a violation of clear timelines set by Congress.
HUD, responding to the ruling, said it remains committed to reform while respecting the law.
What sparked the backlash
HUD’s Continuum of Care program is the country’s largest funding source for homeless housing and services. In November, just weeks before application deadlines, HUD rolled out sweeping changes that:
• capped funding for permanent supportive housing at 30%
• eliminated race-based prioritization for housing
• shifted dollars toward transitional housing
• required law enforcement involvement on local boards
• removed provisions supporting people with chronic illnesses, substance use disorders, and serious mental health conditions
Providers and advocates said the late changes put existing housing projects at risk. They also warned the shake-up ignored years of evidence showing permanent supportive housing reduces street homelessness and keeps people alive.
Pierce County officials noted their region relies heavily on HUD funding to support people with disabilities who cannot live independently. From 2021 to 2023 alone, the county received more than $13 million in HUD grants, most of it tied to permanent supportive housing.
Legal fight and sudden reversal
Nonprofits and counties filed suit in December, arguing HUD’s changes upended long-standing federal priorities and would destabilize programs nationwide.
Instead of defending its proposal, HUD withdrew its funding application process entirely — a move that stunned local governments and left them unsure whether money would still arrive.
CoC boards typically get months to prepare proposals. This year, they were left in limbo. Some programs may now face contract gaps, threatening housing placements and support services.
Advocates say that without clarity — or funding — shelters could close, families could lose stability, and communities could see more people forced back onto the streets.
The uncertainty began after President Trump signed an executive order signaling a new direction on homelessness policy, shifting focus away from the “housing first” model that has shaped HUD strategy for decades.
For now, the judge’s ruling pauses the changes, but the future of federal homeless funding remains unclear — and local leaders are bracing for fallout.
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