Attorney General sues Trump Administration over HUD policy resulting in homelessness

Vermont Business Magazine Attorney General Charity Clark and a coalition of 20 other states sued the U.S. Department of Housing and Urban Development (HUD) today for illegally upending supports for tens of thousands of Americans experiencing homelessness or housing insecurity with abrupt changes that will limit access to long-term housing and other services.

For decades, HUD has helped local and regional coalitions plan and coordinate housing and services for people experiencing homelessness through Continuum of Care (CoC) grants, which were created by Congress. Providers pair these grants with other funding sources and rely on the predictability and continuity of the grants to support the unhoused. HUD has a longstanding policy of encouraging a “Housing First” model that provides stable housing to individuals without preconditions like sobriety or a minimum personal income. These policies are proven to improve housing stability and public health while reducing the costs of homelessness to individuals and their communities.

HUD is drastically changing its Continuum of Care grant program in violation of congressional intent by dramatically reducing the amount of grant funds that can be spent on permanent housing and project renewals and putting new unlawful conditions on access to the funding. These requirements include that providers only recognize two genders, mandate residents accept services as a precondition to obtain housing and punish providers in localities that do not enforce strict anti-homeless laws. 

These barriers are in contrast to HUD’s previous guidance and Congress’ approval. Previous changes to the grant conditions have been incremental to not disrupt providers’ ability to provide housing and to budget for their programs well in advance. These wholesale changes will create administrative chaos and likely result in thousands losing housing.

“Vermont is experiencing an acute housing crisis that is pushing many of our neighbors into homelessness and housing insecurity, and rather than working with states like ours to address this crisis, the Trump Administration is unlawfully restricting the use of federal funding for housing support,” said Attorney General Clark. “I am suing to preserve this funding stream into Vermont, protect the Vermonters who rely on these grants to access stable housing, and uphold our system of government.”

Previously, HUD has directed approximately 90% of Continuum of Care funding to support permanent housing, but the agency’s new rule – which Congress never authorized – would cut that by two-thirds for grants starting in 2026. Similarly, HUD has long allowed grantees to protect around 90% of funding year to year – essentially guaranteeing renewal of projects to ensure that individuals and families living in those projects maintain stable housing. 

But HUD has slashed this figure, too, to only 30%. As a result, permanent housing projects—which represent nearly 80% of existing CoC grant funding in Vermont—could receive only one-sixth the amount of funding that they had planned and relied on. These new policies virtually guarantee that tens of thousands of formerly homeless people in permanent housing nationwide will eventually be evicted through no fault of their own when the funds aren’t renewed. 

Additionally, HUD plans to withhold funds to applicants that acknowledge the existence of trans and gender-diverse people, to de-prioritize services to people with mental health issues or substance-use disorder, and to discriminate against localities whose approach to homelessness differs from the administration’s.

The complaint alleges HUD violated its own regulations by not engaging in rulemaking before issuing the changes and violated the law by not receiving congressional authorization for these new conditions, many of which are directly contrary to federal law and HUD regulations. The plaintiffs also argue that HUD’s actions are arbitrary and capricious, as HUD has made no effort whatsoever to explain the abandonment of their own longstanding policies or consider the obvious consequences of tens of thousands of vulnerable people being suddenly evicted. The agency explicitly encouraged grantees to implement Housing First policies and to focus on the particular needs of LGBTQ+ individuals as recently as last year.

The complaint was filed this morning in the federal District of Rhode Island. Joining Attorney General Clark in filing are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Jersey, New York, Oregon, Rhode Island, Washington, Wisconsin, and the governors of Kentucky and Pennsylvania.

A copy of the complaint is available on our website. 

Today’s lawsuit is the 35th case Attorney General Clark has brought against the Trump administration since President Trump took office in January. For more information on actions taken by the Attorney General on behalf of Vermonters, visit our website at ago.vermont.gov/ago-actions.

11.25.2025. MONTPELIER, Vt. – Attorney General 

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