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Dive Brief:

• A U.S. District Court of Rhode Island judge issued a summary judgment on Monday against last-minute alterations to a 2025 Continuum of Care grant notice of funding opportunity last year by the U.S. Department of Housing and Urban Development, which sought to eliminate funds for longstanding “housing first” approaches to homelessness. 
• In a striking rebuke, District Judge Mary McElroy wrote that HUD’s actions “to hastily eliminate its Housing First approach serve as the hallmark of unreasoned decision making,” and that the agency created a “procedural nightmare” for localities in violation of the Administrative Procedure Act, while also failing to duly consider the harm its “rapid, untimely overhaul” might cause. 
• The ruling stopped short of issuing a permanent injunction that would bar the agency from implementing such policy changes in the future, calling the plaintiffs’ request “speculative.” 

Dive Insight:

In November 2025, HUD issued a notice of funding opportunity — months late — for a congressionally approved round of fiscal 2025 Continuum of Care grants. The NOFO included drastic policy alterations that deemphasized longstanding “housing first” approaches to homelessness and added new requirements. Faced with litigation, the agency retracted the November NOFO, only to issue another in December containing similar policy changes. 

The court preliminarily enjoined HUD from displacing the original criteria. As lawsuits have played out, HUD has since been gradually doling out the 2025 funds, albeit at a slower pace than usual, Politico reported. 

“The court rightly recognized the harm to families and communities across the country,” Toby Merrill, litigation director for Public Rights Project, a nonprofit that partners with local governments on civil rights issues, said in a statement following the June 29 ruling. “Local governments rely on programs created by Congress to fight homelessness. HUD’s illegal attempts to redirect this critical funding would have affected the ability of people to access the housing and services they need to remain safe and stable.”

HUD issued its $4.04 billion NOFO for fiscal 2026 Continuum of Care grants June 1, containing some of the major shifts away from “housing first” that it sought to implement last year. 

“The ‘housing first’ experiment failed Americans by warehousing the vulnerable without results,” HUD Secretary Scott Turner said in a June news release. “This ideology promised to end homelessness. Instead, billions of taxpayer dollars were spent while homelessness increased to record levels.”

“Housing alone will not solve a crisis driven by addiction and mental illness,” Turner added. “Under President Trump’s leadership, HUD is making necessary reforms to put recovery first.”

National Alliance to End Homelessness CEO Ann Oliva said in a statement that the organization remains “deeply concerned” over the agency’s “similarly reckless changes” in its latest NOFO, and that it is reviewing continued legal actions.