Court Blocks HUD Housing Changes

AG: Maine News

Filed December 19th, 2025

Detected March 18th, 2026

Summary

A federal judge has blocked changes to HUD's Continuum of Care grant program, which provides homelessness assistance. The court sided with a coalition of states, finding HUD's changes illegal and harmful to tens of thousands of people nationwide, including 1,200 in Maine.

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What changed

A federal judge has issued a preliminary injunction halting the U.S. Department of Housing and Urban Development's (HUD) changes to its Continuum of Care grant program. The court found that HUD's modifications, which limited access to long-term housing and services, were implemented illegally and in violation of congressional intent. The lawsuit, brought by a coalition of states including Maine, argued that HUD rescinded a necessary program notice and replaced it with one that imposed unlawful conditions, penalized providers recognizing gender identity, and disadvantaged programs addressing mental disabilities and substance use disorders. The judge ordered HUD to process applications under the program's prior terms.

This ruling protects tens of thousands of individuals nationwide, including approximately 1,200 in Maine, from losing critical housing support. Regulated entities, particularly housing providers receiving Continuum of Care grants, should continue to operate under the pre-change program guidelines. The preliminary injunction means HUD cannot implement its new, restrictive conditions. The decision underscores the importance of adhering to statutory timelines and congressional directives in federal grant programs and highlights the potential legal challenges to administrative actions perceived as arbitrary, capricious, or exceeding statutory authority.

What to do next

Continue processing Continuum of Care grant applications under pre-change program terms.
Monitor further court proceedings and any potential appeals or revised guidance from HUD.

Source document (simplified)

Court Blocks HUD Changes That Would Have Left Thousands Without Housing

December 19, 2025

FOR IMMEDIATE RELEASE

Contact: Danna Hayes

Danna.hayes@maine.gov

Court Blocks HUD Changes That Would Have Left Thousands Without Housing

Augusta, MAINE – A federal judge today ordered the U.S. Department of Housing and Urban Development (HUD) to preliminarily halt changes to its Continuum of Care grant program — the largest resource for federal homelessness assistance funding — after a coalition of states argued in court that the changes were illegal and would leave tens of thousands of people around the country without a place to live.

In her order orally granting a preliminary injunction, U.S. District Court Judge Mary McElroy barred HUD from implementing its proposed changes to the Continuum of Care program and directed HUD to process applications under the terms that existed prior to its unlawful program changes.

A coalition co-led by the attorneys general of Washington, New York, and Rhode Island sued HUD in November for illegally upending support for people experiencing housing insecurity or homelessness by abruptly rescinding a necessary program notice, replacing it with another that limited access to long-term housing and other services. The lawsuit says HUD drastically changed its Continuum of Care grant program in violation of congressional intent by sharply reducing funding for permanent housing and putting unlawful conditions on access to the funding.

The illegal conditions include penalizing housing providers that recognize gender identity and diversity and mandating residents agree to additional conditions to obtain housing. HUD also added illegal conditions to punish providers in localities that do not enforce strict anti-homeless laws and disadvantage programs that address mental disabilities and substance use disorder. Those conditions go against HUD’s previous guidance and were not authorized by Congress. The program notice was also issued well after HUD’s congressionally-mandated deadline for making program changes, virtually guaranteeing gaps in funding.

“With the court ordering the federal government to simply follow the law and release critical housing program grant funds as Congress directed, stability and the rule of law are being advanced over the chaos and ideological whims of this Administration,” said Attorney General Aaron Frey. “By virtue of this preliminary order sought by Maine and a coalition of other states, 1,200 Mainers are protected from homelessness that would undoubtably result from being unlawfully deprived of important housing support promised by Congress.”

In Maine, Continuum of Care programs support stable housing for more than 1,800 people, including families with children, seniors, veterans, people with mental and physical disabilities, and survivors of domestic violence.

“I applaud Attorney General Frey for securing this injunction to stop the Trump Administration’s cruel policy change, which jeopardized housing for 1,200 people in Maine,” said Governor Janet Mills. “This needless and misguided directive would have hurt Maine people and forced Maine cities and towns to grapple with an increased demand for more emergency shelters and services. The Trump Administration should focus on helping people with rising cost of living, not taking away housing from vulnerable people.”

In their complaint, 20 attorneys general and two governors argued that HUD’s actions were arbitrary and capricious, as HUD made no effort to explain the abandonment of its own longstanding policies, failed to reckon with the obvious consequences of abruptly terminating funding for housing occupied by formerly homeless families and individuals, and violated the law by not following the timeline Congress set for this program and not receiving congressional authorization for these new conditions. The plaintiffs also argued HUD violated its own regulations by not engaging in rulemaking before issuing the changes.

Washington Attorney General Nick Brown, New York Attorney General Letitia James, and Rhode Island Attorney General Peter Neronha are leading the lawsuit, which is joined by Attorney General Frey and the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Massachusetts, Maryland, Michigan, Minnesota, New Jersey, New Mexico, Oregon, Vermont, Wisconsin, and the governors of Kentucky and Pennsylvania.