NC Housing Coalition joins lawsuit against HUD over housing counseling cuts  

A North Carolina housing advocacy group and nine other nonprofits have asked a federal court to issue a temporary restraining order to block the Trump administration from withholding funds for housing counseling programs.

The request for a temporary restraining order was filed Wednesday in the U.S. District Court for the District of Columbia. It comes a day after the organizations sued the U.S. Department of Housing and Urban Development over the agency’s “abrupt cancellation” of $56 million in housing counseling grants it and other longtime recipients expected to receive.

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The lawsuit was filed by Democracy Defenders Fund and Jacobson Lawyers Group on behalf of the housing coalition and nine other nonprofit organizations across the nation that provide housing support services.

The plaintiffs contend the Trump administration’s “pocket rescission” jeopardizes housing security for thousands of families facing foreclosure or eviction, adding that the cuts come as “households face severe affordability pressures and a rising cost of living, making housing guidance essential.”

In a statement to the court, Samuel Gunter, executive director at the North Carolina Housing Coalition, said delays in receiving the grants have already created financial hardships for his organization and others that rely on them. The organizations often borrow from reserves to pay for counseling programs, then submit invoices for reimbursement, he said.   

“For over thirty years, agencies have provided services to clients with the expectation that they would be reimbursed by the grant on a quarterly basis,” Gunter said. 

Gunter said the counseling services are critical for families.

“Local housing counseling agencies are on the front lines keeping families in their homes in the midst of financial crisis and preparing first-time homebuyers for homeownership,” said “Their work preserves and builds wealth for communities across the state.”

North Carolina will lose $1 million in federal money, the housing coalition said, if the cuts stand. Funding delays have already resulted in the loss of invaluable housing counseling services, Stephanie Watkins-Cruz, the housing coalition’s director of housing policy, said on the group’s weekly housing call.

“North Carolina families will lose access to a vital financial education resource at a time when housing costs are at an all time high,”  Watkins-Cruz said. 

She urged housing organizations to contact Republican Senators Thom Tillis and Ted Budd and other members of congress to let them know how the cuts will impact their communities.

The loss of funding for housing counseling is part of a Trump administration clawback of nearly $1 billion in congressionally approved funding that the plaintiffs say is illegal. 

The plaintiffs argue the administration violated the First Amendment because the clawback of federal dollars was targeted to “penalize recipients for disfavored viewpoints and protected speech outside the program.” 

“The White House effectively has admitted that this rescission was motivated, at least in part, by criticism of the administration’s policies.” Marc H. Morial, National Urban League president and CEO, said in a statement. “That’s not how our Constitution works.”

Morial is referring to the Trump administration’s efforts to rid the federal government of diversity, equity and inclusion (DEI) initiatives.

When the Trump administration announced the cuts last week, it accused grant recipients of peddling “DEI and discrimination based on race.” 

“This HUD program funds NGOs [non-governmental organizations] that ostensibly provide housing counseling, but the program has not shown reduced delinquencies for counseled homebuyers and instead focuses on grantees with DEI-centric discriminatory agendas,” the administration said in a statement posted on the White House website.

Tianna Mays, legal director at Democracy Defenders Fund, said the Trump administration’s decision is as “iIllegal as it is heartless.”

“The president cannot unilaterally slash congressionally appropriated housing funds, putting thousands of vulnerable families at risk,” Mays said. “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 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.

In addition to the NC Housing Coalition, The National Urban League, Housing Action Illinois, New Jersey Citizen Action,  Housing & Community Development Network of NJ,  National CAPACD, Fair Housing Resource Center, Southwest Fresno Community Development Corporation, Somerville Community Corporation and the National Foundation for Debt Management are all plaintiffs in the lawsuit.