U.S. Secretary of Housing and Urban Development Scott Turner participates in a cabinet meeting at Camp David in Thurmont, Maryland, U.S., July 31, 2026. REUTERS/Daniel Heuer
A federal judge just handed President Trump's Department of Housing and Urban Development its third courtroom defeat this year over efforts to reshape how billions in homelessness funding gets distributed nationwide.
U.S. District Judge Mary McElroy ruled Friday that HUD issued its latest funding notice for the $4 billion Continuum of Care program in a "procedurally invalid manner," blocking the agency's newest attempt to overhaul the program, Politico reported.
HUD Secretary Scott Turner has repeatedly criticized the existing system for prioritizing "Housing First" policies, which place people into housing without requiring sobriety or treatment as a precondition. "We are stopping the Biden-era slush fund that fueled the homelessness crisis," Turner previously said, defending the planned changes.
But advocates say the pattern of legal losses tells a different story about HUD's approach.
Mary Frances Kenion, chief equity officer for the National Alliance to End Homelessness, noted this marks the second time her organization has had to sue over an unlawful funding notice from the agency. “What that tells us is that [HUD has] a pattern of not following the law, just based on the decisions that have been handed down by the court to date,” she told Politico.
The legal fight stretches back to November 2025, when HUD first tried rescinding a Biden-era notice and replacing it with rules that would have cut funding for permanent supportive housing while pushing transitional shelter models requiring work or addiction treatment. A December 2025 court order temporarily blocked those changes, forcing HUD to reinstate the original funding terms in January.
Advocates estimated the scrapped overhaul would have put roughly 170,000 people — including families, seniors, veterans and people with disabilities — at risk of losing housing assistance altogether.