NJ Joins Lawsuit Against HUD Over Rule That Could Force Thousands Into Homelessness

Coalition of states sues to block abrupt federal cuts to permanent housing grants, claiming changes violate congressional authority and threaten housing for vulnerable populations.

New Jersey Attorney General Matthew J. Platkin has joined a multi-state lawsuit challenging sweeping new policies from the U.S. Department of Housing and Urban Development (HUD) that advocates say will destabilize housing for tens of thousands of vulnerable Americans. The lawsuit, filed November 25, 2025, alleges that HUD's unauthorized changes to the federal Continuum of Care grant program are unlawful and would drastically limit access to permanent housing services.

Filed in federal court in Rhode Island, the suit was led by the attorneys general of Washington, New York, and Rhode Island, with New Jersey joining 20 other states, the District of Columbia, and the Governors of Pennsylvania and Kentucky as plaintiffs.

“The Trump Administration is actively engaging in an illegal effort to hamper the work of organizations that battle homelessness in New Jersey and across our country,” said Attorney General Platkin. “HUD’s changes to anti-homelessness grants are not only unlawful, they will cause more homelessness by blocking numerous New Jerseyans from getting access to housing, all in the name of political games. We are taking the Trump Administration to court and standing up for New Jerseyans for whom this could mean life or death.”

Federal Housing Policy Changes Under Fire

The lawsuit centers on HUD’s recent restructuring of the Continuum of Care (CoC) grant program, which has long served as a major funding source for housing and services supporting people experiencing homelessness. Plaintiffs claim that the changes:

• Slash permanent housing funding by two-thirds, starting with the 2026 grant cycle

• Reduce automatic project renewals from 90% of funding to 30%, threatening continuity for existing housing programs

• Impose ideological and political conditions, including requiring grantees to align with the Trump-era stance on gender identity

• Penalize providers in communities that lack criminal enforcement policies against homelessness

• Condition aid on mandatory participation in services, contrary to evidence-based “Housing First” strategies

According to the complaint, these changes will jeopardize housing for thousands of individuals and families across the country, violate federal law, and contradict HUD’s longstanding policy commitments—many of which were in effect as recently as 2024.

Legal and Policy Concerns

The plaintiffs argue that HUD violated:

• The Administrative Procedure Act, by making sweeping policy changes without proper rulemaking

• Congressional statutes, by imposing new requirements not authorized by law

• HUD’s own regulations, by disregarding decades of precedent and offering no rationale for policy reversals

The lawsuit also alleges that the new conditions are arbitrary and capricious, and that HUD has not accounted for the real-world consequences, including the risk of mass evictions and disruption to essential services for people with mental health or substance use disorders, LGBTQ+ individuals, and families.

Housing First Model at Risk

For decades, HUD has promoted a “Housing First” model, which provides housing without preconditions like sobriety or proof of income. This model, supported by evidence, improves housing stability, reduces homelessness, and minimizes burdens on public systems like emergency health care and law enforcement.

The new grant conditions, plaintiffs contend, undermine this model by reintroducing barriers and injecting political considerations into funding decisions.

Joining New Jersey in the lawsuit are Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Oregon, Vermont, Washington, Wisconsin, and the District of Columbia, along with the Governors of Kentucky and Pennsylvania.

The coalition is seeking to halt the implementation of the new HUD rules and preserve continued access to housing and support services for individuals and communities already struggling with housing insecurity.

The case is pending in the U.S. District Court for the District of Rhode Island.