Attorney General James Sues Trump Administration to Protect Housing Counseling for New Yorkers
NEW YORK – New York Attorney General Letitia James today sued the Trump administration to stop it from cutting off funding that helps New Yorkers buy their first homes, stay in the homes they have, and manage their rent and finances. The lawsuit, filed on the last day of the federal fiscal year, challenges the U.S. Department of Housing and Urban Development's (HUD) refusal to award approximately $56.1 million that Congress set aside for housing counseling nationwide, part of the president’s so-called “pocket recissions.” That funding is set to expire at midnight tonight, and New York stands to lose more than a million dollars in support for thousands of vulnerable New Yorkers statewide.
“Housing counselors help New Yorkers buy their first homes, keep the homes they have, and stay on top of rent and other bills,” said Attorney General James. “For decades, Congress has awarded funding to support these critical efforts. Now, the Trump administration is cruelly running out the clock so these funds disappear at midnight. I am going to court tonight to make sure New York families can still get the help they need.”
“With housing costs on the rise thanks to the dangerous policies pushed by the Trump administration, canceling this funding threatens to push even more Americans to the brink,” said Governor Kathy Hochul. “Here in New York, we’re not backing down, and with the support of Attorney General James, we’re pushing back on the federal government to restore this funding and deliver for our residents.”
For nearly 60 years, HUD has funded programs that give homeowners, homebuyers, and renters the information they need to succeed in the housing market, including guidance on financial management, financial literacy, and property maintenance. Every year since 2013, the New York State Housing Finance Agency has received up to $1 million in housing counseling funds from HUD. The agency then passes the grant money on to 22 HUD-certified housing counseling organizations statewide, each of which receives between $20,000 and $100,000 per year.
In March 2026, HUD opened applications for this year's funding, set an anticipated award date of August 3, 2026, and said it expected to make about 175 awards nationwide. New York submitted its application on May 22, 2026, and HUD confirmed it was complete, but then went silent. Without explanation, New York never received any of the expected federal housing counselor funding. Some New York counseling organizations have already begun the work these funds were meant to cover.
On September 25, 2026, just five days before the funds were set to expire, President Trump announced a pocket rescission of nearly $1 billion in federal spending, including the housing counselor program. A pocket rescission is a request to Congress to cancel funding, sent so late in the fiscal year that the money lapses before Congress can act. In announcing the move, the administration attacked housing counseling grantees as “radical groups” and “far-left” organizations, faulting them for positions such as believing that housing is a human right. None of these claims have anything to do with the counseling services funded by Congress.
In the lawsuit, Attorney General James emphasizes that Congress already rejected the administration's attempt to end this program. The president's Fiscal Year 2026 budget proposed eliminating housing counseling funding entirely. Congress refused that proposal and fully funded the program in the appropriations law signed on February 3, 2026. In the same law, Congress included a measure expressly barring agencies from eliminating or reducing a program unless Congress enacts the change.
In 2024, this funding helped New York prevent more than 250 evictions and almost 300 foreclosures and helped nearly 300 first-time homebuyers close on their first home. Now, as a result of the president’s pocket rescission, over 7,000 households in New York are at risk of losing access to one-on-one counseling services, and nearly 2,800 households may lose financial assistance to improve their living conditions.
Attorney General James argues that HUD's actions violate the Administrative Procedure Act, the federal housing counseling statute, and federal appropriations laws. Federal law requires the HUD Secretary to make financial assistance available to HUD-approved housing counseling agencies and state housing finance agencies, which the administration is now refusing to do. Attorney General James also argues that HUD acted arbitrarily by basing its decision on the perceived political views of grantees, a factor Congress never authorized, and by ignoring the harm to more than 2,200 housing counseling agencies and 6,700 housing counselors nationwide who rely on this funding.
Attorney General James is asking the court to declare HUD's actions unlawful, block HUD from letting the funds lapse, and preserve the funding past today's deadline so New York can ultimately receive its award.
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