Attorney General Kwame Raoul, along with a coalition of 20 attorneys general and two state governors, has filed a lawsuit against the U.S. Department of Housing and Urban Development (HUD) over recent policy changes to its Continuum of Care grant program. The coalition argues that these new rules will reduce access to long-term housing and other services for many Americans experiencing homelessness or housing insecurity.
The complaint challenges HUD’s changes, which impose new conditions on funding and decrease the proportion of grant funds available for permanent housing and project renewals. According to the coalition, these actions could lead to the eviction of tens of thousands of individuals and families who have previously experienced homelessness.
“This is yet another attempt by the Trump administration to ignore congressional intent by threatening to remove critical grants that fund programs for our most vulnerable residents,” Raoul said. “Rather than continuing to support programs that keep them safe and housed, the administration has embraced policies that risk trapping people in poverty, while punishing them for being poor. In Illinois, we prioritize efforts to build affordable and permanent supportive housing and promote financial stability. I will continue to stand by my colleagues to protect these priorities in Illinois and across the country.”
The lawsuit states that HUD had previously supported a “Housing First” model, which provides stable housing without preconditions—a practice shown to improve stability, public health, and lower community costs related to homelessness. For decades, Congress-created HUD grants have supported planning and coordination of homeless services throughout Illinois via local coalitions.
Historically, about 90% of Continuum of Care funding was allocated for permanent housing. Under HUD’s new rule starting in 2026, this share would be reduced by two-thirds. Similarly, funding allowed for project renewals has dropped from roughly 90% down to only 30%. The coalition contends that these reductions mean many formerly homeless people currently in permanent housing may lose their homes if funds are not renewed.
HUD’s revised policies also include withholding funds from applicants who acknowledge transgender individuals or prioritize services for people with mental health or substance-use disorders. Localities whose approaches differ from federal priorities could also be penalized. The attorneys general argue that such sweeping changes were made without adequate public input or consideration of potential harm.
Illinois service providers rely on Continuum of Care grants alongside other funding sources due to their predictability and continuity. In 2024 alone, more than $182 million in federal funds supported various homelessness programs statewide through 19 regional coalitions covering all regions of Illinois. The state government has increased its own spending on homelessness prevention by over 150% during the last two years.
Raoul’s complaint asserts that HUD failed to follow proper rulemaking procedures before implementing these changes and did not obtain necessary congressional approval—contradicting existing statutes as well as HUD’s own regulations. It also notes HUD provided no justification for reversing its longstanding policies or considering negative impacts on vulnerable populations; just last year it encouraged grantees to implement Housing First strategies focused on LGBTQ+ needs.
Joining Attorney General Raoul are attorneys general from Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont Washington Wisconsin—and governors from Kentucky and Pennsylvania.
