HUD conditioned $3.9B in homelessness grants on DEI, transgender-rights, and immigration-enforcement compliance

On November 13, 2025, the U.S. Department of Housing and Urban Development announced its Fiscal Year 2025 Continuum of Care (CoC) Notice of Funding Opportunity, restructuring how the program allocates $3.9 billion a year in homelessness grants. HUD Secretary Scott Turner said the notice would redirect funding away from what the agency called a Biden-era "slush fund" for permanent "Housing First" supportive housing -- which had received roughly 90% of prior CoC awards -- toward transitional housing and treatment-based programs, and would require 70% of projects to compete for renewal rather than being automatically refunded.

Beyond the funding-model changes, the notice conditioned grant eligibility on requirements unrelated to housing outcomes: grantees had to cooperate with federal immigration enforcement and comply with the administration's executive orders eliminating diversity, equity and inclusion programs and recognizing only male and female gender identities. A coalition of states led by Washington, along with the National Alliance to End Homelessness, other nonprofits, and several cities, sued HUD and Turner in federal court in Rhode Island, arguing the changes were unlawful and would push vulnerable people back onto the streets during winter.

Updates

2025-12-19 — Federal judge blocked HUD's funding overhaul with preliminary injunction [2]

U.S. District Judge Mary McElroy in Rhode Island granted a preliminary injunction blocking the November 2025 Continuum of Care overhaul nationwide, finding it was likely unlawful and would push people back onto the streets in the middle of winter. She ordered HUD to maintain its previous funding formula and said the agency's repeated last-minute changes to its own funding notice meant "the constant churn and chaos seems to be the point." HUD said in a statement it would continue providing homelessness assistance funding to grantees nationwide.

2026-04-01 — 1st Circuit declined to stay the injunction blocking HUD's overhaul [3]

The 1st U.S. Circuit Court of Appeals declined to pause the injunction, with Circuit Judge Julie Rikelman writing that a stay would be "destabilizing and disastrous" for the roughly 4,000 local housing coalitions relying on the funding. HUD did not respond to a request for comment.

2026-06-30 — Federal judge ruled HUD's overhaul violated federal law but stopped short of a permanent injunction [4]

U.S. District Judge Mary McElroy ruled that HUD's November 2025 policy change was arbitrary and capricious under the Administrative Procedure Act, finding HUD had failed to conduct required research or notice-and-comment before eliminating its Housing First approach -- calling it "the hallmark of unreasoned decision making." She declined to issue a permanent injunction and separately declined to block HUD's later, distinct June 2026 funding notice.