A federal court has blocked new rules that would have restricted billions of dollars in federal funds used to fight homelessness, according to state officials.
The U.S. District Court for the District of Rhode Island ruled that the Department of Housing and Urban Development, or HUD, cannot implement new restrictions on its Continuum of Care grant program. The decision comes after the Michigan Attorney General’s Office joined a coalition of 18 other states and two governors to sue the federal government in November 2025.
The lawsuit challenged new conditions HUD placed on more than $3 billion in grant money. The coalition argued the changes violated federal law and overstepped the power of Congress to control spending.
The blocked funds support housing and services for vulnerable groups, including veterans and people with disabilities.
According to the lawsuit, the new federal rules would have capped money meant for permanent supportive housing, potentially putting 170,000 people at risk of losing their homes. The court granted summary judgment to the states, ruling that the federal agency’s conditions were unlawful.
Local communities, like many across the country, have faced a growing homeless population in recent years, with no immediate solution in sight.