On December 19, 2025, a federal judge in Rhode Island issued a sweeping rebuke to the Trump administration’s attempt to overhaul a core U.S. homelessness program, halting changes that advocates said could have put more than 170,000 people at risk of losing stable shelter in the middle of winter. U.S. District Judge Mary McElroy granted a preliminary injunction blocking the Department of Housing and Urban Development (HUD) from implementing new rules that would have dramatically shifted more than $3 billion—potentially as much as $4 billion, according to some reports—in federal homelessness funding away from permanent housing and toward transitional models requiring work or treatment for addiction or mental illness.
The ruling, as reported by NPR and other outlets, requires HUD to maintain its existing funding formula for the Continuum of Care program, the nation’s largest homelessness grant initiative, while a legal challenge from 20 states, Washington, D.C., local governments, and nonprofit organizations plays out in court. At the heart of the dispute is whether HUD’s proposed changes, announced abruptly in November, violate the McKinney-Vento Homeless Assistance Act, which Congress designed to prioritize long-term housing stability over short-term or conditional programs.
“Ensuring lawful agency action and continuity of housing and stability for vulnerable populations is clearly in the public interest,” Judge McElroy said during the hearing, according to TNND. “It’s concerning to the court that we sort of keep having these cases where the agency issues these orders or memos or changes of policy, but they haven’t done the work to get that policy through. And so it sort of begs the question, are they really intending to change the policy, or is the chaos the point?”
The plaintiffs, including the National Alliance to End Homelessness, argued that HUD’s overhaul would have slashed funding for permanent housing—long the backbone of federal homelessness policy—and forced local providers to adopt transitional models that include work or service requirements. The new rules also would have allowed HUD to deny funding to groups not aligned with the Trump administration’s positions on diversity, equity, and inclusion (DEI), transgender rights, and immigration enforcement. “That order means that more than 170,000 people—families, seniors, veterans, and people with disabilities—have respite from the government’s assault,” the National Alliance to End Homelessness said in a statement cited by NPR.
HUD officials, for their part, defended their broader goals after the ruling. In a statement to NPR, HUD spokeswoman Kasey Lovett said, “HUD will continue working to provide homelessness assistance funding to grantees nationwide. The Department remains committed to program reforms intended to assist our nation’s most vulnerable citizens and will continue to do so in accordance with the law.”
But Judge McElroy’s frustration with the agency was palpable. Just hours before a December 8 hearing, HUD withdrew its revised funding notice, promising to make changes in response to critics’ concerns. Yet on the day of the ruling, HUD’s attorney told the court that a new version wouldn’t be ready until the end of the day. “The timing seems to be strategic,” McElroy said, suggesting the agency was trying to avoid judicial review. “The constant churn and chaos seems to be the point.”
In defending the agency’s actions, HUD’s lawyer John Bailey argued that the changes were simply an effort to bring the program in line with President Trump’s executive orders, which he called “legal directives.” The judge was quick to interject, pointing out that only Congress—not the president—can make laws. This distinction lies at the crux of the legal challenge: whether HUD has the authority to impose such sweeping changes without legislative approval.
Local service providers and advocates nationwide have been scrambling to respond to the sudden policy shift. Pam Johnson, of the Minnesota Community Action Partnership, told NPR, “Our agencies are just scrambling right now to try to respond. It also just reverses 40 years of bipartisan work on proven solutions to homelessness. So it’s really, it’s kind of shocking.”
For decades, U.S. homelessness policy has favored permanent housing with optional treatment for addiction or mental illness—a model supported by years of research showing it’s effective at keeping people off the streets. But some conservatives, including HUD Secretary Scottt Turner, have argued this approach hasn’t solved record rates of homelessness. “What is the root cause of homelessness? Mental illness, drug addiction, drug abuse,” Turner said recently on Fox Business Network. “During the Biden administration, it was just warehousing. It was a homeless industrial complex.” Turner and others backing the changes claim the goal is to push people toward self-sufficiency.
However, many local advocates counter that poverty, low income, and a severe shortage of affordable housing—not mental illness or addiction alone—are the primary drivers of homelessness. “Many in permanent housing have disabilities that make it hard to work full time,” explained Julie Embree, who heads the Toledo Lucas County Homelessness Board in Ohio. While she agrees with the Trump administration’s goals of efficiency and saving money, she says pushing people back onto the streets, where they’re more likely to end up in jail, court, or the hospital, is not cost-effective. “One emergency room visit is just as expensive as a month of sustaining this [permanent housing] program,” Embree noted.
In Los Angeles, Stephanie Klasky-Gamer of LA Family Housing acknowledged the need for more transitional housing, but not at the expense of long-term, stable options. She argued that the idea programs could simply switch from one model to another was not only unrealistic, but illegal. “You cannot take a building that has a 75-year deed restriction and just—ding!—call it interim housing,” Klasky-Gamer said.
Those challenging HUD’s changes say that providers who own such properties—or states that have invested millions in permanent housing—face significant financial jeopardy if their funding isn’t renewed. The abruptness of the proposed overhaul, announced with little notice and only weeks before local providers had to apply for new funding, has drawn bipartisan concern in Congress. Advocates are urging lawmakers to step in and, at a minimum, allow more time to prepare for such a sweeping transition.
For now, Judge McElroy’s injunction keeps the existing funding rules in place while the legal battle continues. She indicated she expects to issue a written order formalizing the injunction early in the week following December 19. As the debate over the future of federal homelessness policy intensifies, the judge’s ruling has provided a temporary lifeline to tens of thousands of people—and a moment of clarity in what has become a chaotic fight over the nation’s approach to its most vulnerable citizens.
