The United States Court of Appeals rejected the federal government’s request to impose new restrictions on housing-assistance grant funding, Attorney General Keith Ellison announced on Apr. 2. The ruling prevents the U.S. Department of Housing and Urban Development (HUD) from implementing changes that would have reduced support for tens of thousands of formerly homeless people across the country.
The case stems from a lawsuit filed last November by Ellison and a coalition of states after HUD altered its Continuum of Care program, which is the largest source of federal homelessness assistance. The agency’s new policy significantly cut allowable spending on permanent housing and added conditions to accessing funds.
A preliminary injunction was issued in December by U.S. District Court Judge Mary McElroy, who found that HUD’s actions could cause irreparable harm to states and those relying on these programs. The appeals court has now upheld this injunction, stating that allowing HUD’s planned restrictions would be “immediately destabilizing and disastrous for their constituents.”
“I’m pleased that my fellow attorneys general and I are continuing to block the Trump administration’s cruel funding cuts that would have put tens of thousands of formerly homeless Americans back onto the streets,” said Attorney General Ellison. “I cannot think of anything more heartless than to pull the rug out from under people who are doing everything they can to get their lives back on track.”
Ellison also criticized other priorities in Washington, saying, “At the same time Trump is trying to throw poor families out onto the streets, he’s spending tens of billions of dollars on war with Iran. Every day, it is becoming more and more clear that Trump’s pledge to put America first was a lie.”
HUD’s Continuum of Care grants have long supported local coalitions addressing homelessness through predictable annual funding—about 90% historically went toward permanent housing projects under policies known as “Housing First.” Under recent changes not authorized by Congress, this share would be reduced by two-thirds starting in 2026; renewal guarantees were also slashed from about 90% to just 30%. Additional proposed policies included withholding funds based on applicants’ positions regarding transgender individuals or approaches toward mental health services.
Observers note this decision maintains continuity for providers supporting unhoused populations while legal challenges continue.
