A federal judge temporarily blocked the Trump administration's efforts to cut roughly $56 million in housing counseling funding — giving Chicago-based Housing Action Illinois and nine other nonprofits across the U.S. some relief.
The victory comes after the 10 nonprofits sued the U.S. Department of Housing and Urban Development on Tuesday for attempting to claw back funding allocated for HUD's Comprehensive Housing Counseling program. The program was created by Congress to provide consumers with first-time homebuyer education classes, foreclosure prevention assistance and other services.
The Democracy Defenders Fund and Jacobson Lawyers Group filed the lawsuit on behalf of the organizations, which includes the National Urban League, North Carolina Housing Coalition, 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.
The attorneys filed a temporary restraining order Wednesday, urging the court to extend the deadline for the funds’ allocation. The funds would have expired Wednesday had the court not intervened.
U.S. District Judge Jia Cobb ruled late Wednesday that suspending the deadline was necessary so the nonprofits and the government could have more time to argue their case.
“The Court is hesitant to determine whether the government is required to obligate nearly $60 million without the government itself being fully heard on the issue,” Cobb wrote in her decision. “However, the Court is likewise hesitant to allow September 30 to pass such as that Plaintiffs would lose out on significant amounts of funding due to allegedly unconstitutional actions.”
The nonprofits said in their complaint that the funds were illegally being withheld because they expressed views rejected by the Trump administration, violating First Amendment protections. And "to punish grantees," President Donald Trump used a pocket rescission to block congresionally appropriated funds.
In a news release last week announcing the rescission package, the White House claimed a number of nonprofits receiving HUD funds were peddling diversity, equity and inclusion practices and discriminating against people based on their race.
The release went on to call out Housing Action Illinois, saying the nonprofit was “a radical left NGO [nongovernmental organization] that believes ‘housing is a human right,’ and is committed to ‘advancing equitable community development and affirmatively furthering racial justice.’” The rescission included $1.5 million that was allocated to Housing Action Illinois.
The government opposed Cobb's suspension, arguing the court doesn’t have the power to override deadlines established by Congress.
Both parties will have a chance to present their case later this month, after the government submits a more detailed response to the nonprofits’ lawsuit.
Sharon Legenza, executive director of Housing Action Illinois, said the nonprofit was “very relieved” the temporary restraining order was granted. Keeping the funds in play means the nonprofits can continue to provide housing counseling support, and they may get reimbursed for services dating back to October 2025 — the start of the federal government’s fiscal year.
The 40-year-old nonprofit has done a “wide variety” of work to help people access safe and quality homes, Legenza said.
In fiscal year 2024, Housing Action Illinois’ housing counseling network served more than 12,500 households, according to a court declaration written by David Young, the nonprofit's director of capacity building. Almost 1,400 households that were served purchased their first home, and nearly 430 households evaded or resolved a mortgage default. In 2025, more than 750 participants from across the nation attended Housing Action Illinois’ housing counseling training, according to Young.
As part of its work, the group serves as an intermediary for HUD’s Comprehensive Housing Counseling program. It applies for the funding, then doles it out as subgrants among its 38 subgrantees.
Housing Action Illinois’ subgrantees work across eight states and Washington, D.C., to provide housing services to residents, according to Legenza.
“As we think about … inflation and just the increased cost of housing generally, more and more people are feeling stretched, and more and more people are looking to get assistance to help them figure out how are they going to be able to maintain their housing,” she said. “That's what housing counseling agencies do.”
