The Continuum of Care (CoC) program, which administers about $4 billion in annual federal funding, is embroiled in litigation after HUD proposed a 30% cap on funding requests for permanent supportive housing. Nearly $2 billion in multifamily rent payments and as many as 97,000 households could face instability if the rule is enacted. A judge reinstated a Sept. 30 application deadline, forcing providers to apply amid legal uncertainty, while roughly 1,000 agencies still await unresolved 2024 grant renewals.
Housing Providers Rush to Secure $4B as HUD’s Continuum of Care Funding Faces Court Fight
Credit: Unsplash/Kiko Camaclang
Housing providers that shelter some of the nation’s most vulnerable people are navigating heightened uncertainty while a federal court considers proposed changes to the U.S. Department of Housing and Urban Development’s Continuum of Care (CoC) program, which governs roughly $4 billion in annual spending.
What’s at stake
Nearly $2 billion in multifamily rent payments are at risk as a judge weighs revisions to the CoC program that would limit how much funding can be used for permanent supportive housing and other long-term rental subsidies. HUD’s proposed 30% limit on requests for permanent supportive housing could put as much as $1.8 billion in annual rental payments in jeopardy, according to Community Solutions, a homelessness-prevention nonprofit.
Timeline and legal status
More than a dozen states sued after HUD released the 2025 notice of funding opportunity (NOFO) in November. A judge paused the funding process, then on Sept. 16 ordered it restarted and reinstated a Sept. 30 deadline for applications — giving many CoC providers only two weeks to prepare materials. Because the litigation is ongoing and subject to appeal, the timetable and final rules could change again.
Who could be affected
The CoC program supports local efforts for people experiencing or at risk of homelessness — including survivors of domestic violence and disadvantaged youth. HUD reports that more than 1.2 million beds were operating nationwide under the program in 2025, spanning both temporary and permanent housing models.
NAHRO’s director of policy and legislative affairs, Eric Oberdorfer, warns that up to 97,000 households could lose housing stability if the proposed rules are implemented. Organizations such as Breaking Ground (New York), the Downtown Emergency Service Center (Seattle) and Mercy Housing (national) rely on CoC dollars to support thousands of private-market leases and supportive-housing programs.
U.S. Department of Housing and Urban Development Secretary Scott Turner and President Donald Trump - Credit: Wikimedia Commons/The White House
Financial ripple effects
CoC rental subsidies are not just social-service funding: they represent predictable rental income that stabilizes many multifamily assets. Losing those payments can depress property performance, raise vacancy rates and change how lenders and investors evaluate properties that participate in supportive housing — potentially leading to tighter financing terms or reduced access to capital.
‘Because of the new program rules, they may not know exactly what they’re anticipating to get based on their applications,’ said Georgi Banna, general counsel for the National Association of Housing and Redevelopment Officials (NAHRO).
Gabbi Sandoval Requena, co-chair of New York’s Continuum of Care Board and vice president of external affairs at New Destiny Housing, described the reinstated deadline as a worst-case scenario for providers. She said rapid rehousing is especially vulnerable because tenants lease in the regular market and landlords could be left unpaid if funds are cut.
Lingering fallout from 2024 delays
The 2024 NOFO was also tied up in court. Congress intervened and required HUD to renew existing grants, but of roughly 6,400 grants slated for renewal, only about 5,300 have been fully executed, leaving approximately 1,000 agencies still awaiting 2024 funding while uncertainty mounts over 2025 awards.
State and local responses
States and municipalities are exploring short-term backstops to keep people housed, but many have limited reserve resources. Advocacy groups warn there are few easy substitutes for the federal subsidies that sustain permanent supportive housing and the broader homeless-services infrastructure.
Bottom line
With litigation unresolved and a tight application timetable, providers, landlords and state agencies must plan for multiple scenarios. The final court outcome will determine whether CoC funding rules shift away from a long-standing emphasis on permanent housing or whether current funding priorities remain intact.
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