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The Democracy Defenders Fund and Jacobson Lawyers Group filed a lawsuit in U.S. District Court for the District of Columbia against the U.S. Department of Housing and Urban Development on behalf of 10 nonprofit organizations that provide housing support services. The suit challenges HUD’s cancellation of grant funding that longtime recipients had expected to receive, after months of delays and uncertainty.
Delays and policy changes already forced organizations to overextend their budgets and incur uncompensated costs. The latest funding cuts will eliminate Americans’ access to homebuyer education and foreclosure-prevention counseling, alongside critical support for renters and individuals experiencing homelessness.
The lawsuit follows the Trump administration’s recent issuance of pocket rescissions cutting $56 million in housing counseling funds, a move that directly jeopardizes the housing security of thousands of families facing foreclosure or eviction. The plaintiffs provide essential support for everyday Americans navigating financial crises, modifying mortgages or striving for homeownership. These federal cuts deal a blow to prospective homebuyers, renters and unhoused families who rely on counseling services to guide critical financial decisions.
Plaintiffs in the lawsuit include: The National Urban League, Housing Action Illinois, North Carolina Housing Coalition, New Jersey Citizen Action, Housing & Community Development Network of NJ, National CAPAC, the Fair Housing Resource Center, Southwest Fresno Community Development Corporation, Somerville Community Corporation, and National Foundation for Debt Management.
The suit highlights First Amendment violations as the administration targeted and canceled grants to penalize recipients for disfavored viewpoints and protected speech outside the program. The lawsuit also claims that HUD’s actions violate federal law, ignore established regulations and arbitrarily reverse three decades of policy. Under the Administrative Procedure Act, the complaint asserts that HUD acted arbitrarily and capriciously by failing to explain its abrupt policy shift, disregarding reliance interests, and withholding congressionally mandated funds.
“The White House effectively has admitted that this rescission was motivated, at least in part, by criticism of the administration’s policies. That’s not how our Constitution works,” Marc H. Morial, National Urban League president and CEO said via a statement. “No president has the authority to retaliate against critics by blocking investments Congress has already approved — a violation made even egregious when the result is denying vital housing resources to struggling communities.”
“The Trump administration’s decision is as illegal as it is heartless,” Tianna Mays, legal director at Democracy Defenders Fund, said via a statement. “The president cannot unilaterally slash congressionally appropriated housing funds, putting thousands of vulnerable families at risk. We will fight this in court on behalf of every household in America that depends on these support services as the cost of living continues to rise.”
“The government’s effort to unilaterally cancel congressionally mandated funding is unlawful standing on its own,” Daniel Jacobson, Founder of Jacobson Lawyers Group, said via a statement. “But it is doubly unlawful because the White House made clear that it is cancelling this program because it does not like the views and speech of recipients of the funds, in blatant violation of the First Amendment.”
