Michigan Attorney General Dana Nessel, joined by officials from 20 other states, has filed a lawsuit against the U.S. Department of Housing and Urban Development over changes to the Continuum of Care grant program. The lawsuit claims HUD’s revisions limit access to long-term housing, impose strict conditions for funding, and could push thousands into homelessness, as reported by the Department of Attorney General.
The coalition argues that the new rules, which only recognize two genders, require participation in services, and exclude certain providers, contradict HUD’s previous directives and federal law. Historically, HUD has supported a "Housing First" approach, and the proposed changes threaten an estimated 7,000 households, including 2,000 families with children, according to the Department of Attorney General.
"Over our 35 years of operation and expertise, MCAH has never encountered a threat as devastating and extreme to persons in poverty as the 2025 COC NOFO," Sarah Rennie, Senior Director of Advocacy for Michigan Coalition Against Homelessness, told Michigan government. The lawsuit says HUD’s new rule could reduce funding for permanent housing from 90% to one-third for 2026, withhold funds from applicants recognizing trans and gender-diverse individuals, deprioritize services for people with mental health or substance-use disorders, and limit support for communities using alternative homeless solutions. MCAH and several states, led by AG Nessel, filed the case in the federal District of Rhode Island, arguing HUD did not follow required rulemaking procedures or get congressional approval, as stated by the Department of Attorney General.
