Federal Court Blocks Trump Administration From Altering Homelessness Funding

Ruling protects over $2 billion in grants supporting 4,000 local housing coalitions

Apr. 1, 2026 at 10:24pm

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A federal appeals court in Boston has refused to allow the Trump administration to impose new restrictions on billions of dollars in grant funding used to provide permanent housing and other services to homeless people. The ruling stems from a lawsuit brought by Democratic officials in 20 states and Washington, D.C., local governments, and nonprofit organizations, who argued the administration's efforts conflicted with federal law prioritizing stable and permanent housing.

Why it matters

The Continuum of Care program has long been based on a 'housing-first' approach to combating homelessness, which prioritizes placing people into permanent housing without preconditions. The Trump administration has criticized this approach and sought to overhaul the grant program to focus on transitional housing initiatives with work requirements and other conditions. This court ruling protects critical funding for local organizations providing housing and support services to vulnerable populations.

The details

The federal appeals court declined to put on hold a lower court ruling that had blocked the U.S. Department of Housing and Urban Development (HUD) from changing the criteria used to distribute Continuum of Care program grant funding. Lawyers for the plaintiffs said that if the administration had prevailed, more than $2 billion worth of grant funding supporting 4,000 local housing coalitions could have become subject to HUD's new rules, potentially leading to the shuttering of housing organizations and people losing their homes.

  • On December 2, 2025, U.S. District Judge Mary McElroy in Providence, Rhode Island, concluded HUD's efforts conflicted with federal law prioritizing permanent housing.
  • In February 2026, Congress passed a spending bill mandating HUD renew Continuum of Care projects and issue new grant awards.
  • On April 1, 2026, the federal appeals court refused to allow the Trump administration to impose new restrictions on the grant funding.

The players

U.S. District Judge Mary McElroy

The judge who initially ruled that HUD's efforts conflicted with federal law prioritizing permanent housing.

Jill Habig

The head of the legal group the Public Rights Project, which represented some of the plaintiffs in the case.

U.S. Circuit Judge Julie Rikelman

One of the three judges on the appeals court panel that declined to put the lower court ruling on hold.

Donald Trump

The former U.S. president whose administration sought to impose new restrictions on the Continuum of Care program grant funding.

Joe Biden

The current U.S. president who appointed the appeals court judges that ruled against the Trump administration's efforts.

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What they’re saying

“Because the appeals court refused to grant the federal government's motion to stay the injunction pending appeal, almost 200,000 people — many living with disabilities — will not be displaced from stable housing.”

— Jill Habig, Head of the Public Rights Project

“In sum, the record paints a disturbing picture of the harms that would flow to the plaintiffs, their constituents, and the public from issuing a stay.”

— U.S. Circuit Judge Julie Rikelman

What’s next

The Trump administration may choose to appeal the appeals court's decision to the Supreme Court, but the ruling protects the Continuum of Care program funding for now.

The takeaway

This court ruling is a significant victory for advocates of the 'housing-first' approach to combating homelessness, which prioritizes providing stable, permanent housing without preconditions. It preserves critical federal funding for local organizations delivering essential services and housing to vulnerable populations.