Washington Joins Lawsuit Challenging HUD Shift That Threatens Housing Stability

Washington Attorney General Nick Brown and a coalition of 20 states and jurisdictions filed a lawsuit Monday against the U.S. Department of Housing and Urban Development, alleging that abrupt and unlawful changes to a key housing program could strip support from tens of thousands of people experiencing homelessness.

The lawsuit challenges recent policy shifts in HUD’s Continuum of Care grant program — a major federal funding source for local housing and service providers. According to the complaint, HUD is dramatically reducing the amount of funding available for permanent housing and project renewals while imposing new restrictions that contradict congressional intent and longstanding agency policy.

“These changes are designed to trap people in poverty and then punish them for being poor,” Brown said. “Congress designed this program in recognition that homelessness is a crisis that requires immediate stabilization and continuing support to reverse.”

Under the new policy, HUD plans to:

· Cut funding for permanent housing by two-thirds starting in 2026.

· Reduce the amount of grant funds providers can carry forward year to year from 90% to just 30%, threatening continuity for existing programs.

· Impose new conditions that could penalize applicants who recognize more than two genders, require acceptance of services as a precondition for housing, or operate in jurisdictions that do not enforce strict anti-homeless laws.

The changes have raised alarm among housing advocates and local officials who say the rule would destabilize successful programs and increase homelessness across the country.

“Ripping away this critical funding is yet another cruel attack by the Trump administration on our most vulnerable Washingtonians,” said Gov. Bob Ferguson. “Trump is once more playing politics with people’s most basic needs.”

“People’s homes are not political experiments,” said Rep. Nicole Macri (D-Seattle). “This unlawful and deeply harmful policy shift puts thousands of Washingtonians at risk of losing their homes.”

For decades, Continuum of Care grants have been a backbone of federal support for local homeless response systems. Providers rely on the consistency of this funding to operate programs, coordinate services, and pair HUD dollars with state and philanthropic funding.

In Washington, about $120 million in Continuum of Care grants are distributed annually. King, Pierce, Snohomish, Spokane, and Clark counties receive the majority of these funds, while the remaining $25 million is distributed to 34 primarily rural counties.

The state has seen firsthand how these grants change lives. One Bellingham resident shared their experience with housing and case management services provided by Opportunity Council.

“When you become unhoused, survival takes over. Routines, organization, even your sense of who you are, gets pushed aside,” the individual wrote. “Getting housing was a huge relief, but functioning didn’t come back overnight. It took more than a year before I could manage daily routines or feel safe again. That’s why wraparound services matter — they are the bridge between ‘not dying’ and actually living.”

In Yakima County, organizations warn that the proposed changes would undermine years of progress.

“Permanent supportive housing is not only compassionate, evidence-based, and socially accountable, it is the most efficient and fiscally responsible use of taxpayer dollars,” said Jennifer Schlenske, executive director of Justice Housing Yakima.

“It has taken two decades to build a system that keeps this vulnerable population off the streets,” said Rhonda Hauff, president and CEO of Yakima Neighborhood Health Services. “HUD’s change in priorities destabilizes our entire housing system — just like a game of Jenga.”

The lawsuit, filed in federal court in Rhode Island, argues that HUD violated the law by failing to go through the required rulemaking process and by implementing changes that contradict congressional mandates. Plaintiffs also claim the policy shift is arbitrary, capricious, and lacks justification — particularly given HUD’s prior support for Housing First models and inclusive services for LGBTQ+ populations.

The legal challenge is led by Brown, New York Attorney General Letitia James, and Rhode Island Attorney General Peter Neronha, joined by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Jersey, Oregon, Vermont, Wisconsin, and the governors of Kentucky and Pennsylvania.