Civil Rights Groups Sue Hud For Withholding Fair Housing Grants

Two civil rights organizations have filed a federal lawsuit accusing the U.S. Department of Housing and Urban Development (HUD) of unlawfully withholding millions of dollars in grant funding intended to enforce fair housing laws.

The suit — filed by the National Fair Housing Alliance (NFHA) and the Tennessee Fair Housing Council (TFHC) in the U.S. District Court for the District of Columbia — alleges that HUD’s refusal to distribute congressionally appropriated funds under the Fair Housing Initiatives Program (FHIP) violates federal law and the U.S. Constitution.

“Fair housing organizations around the country are being forced to lay off staff, close investigations, and turn away people experiencing discrimination,” said Reed Colfax, co-managing partner at Relman Colfax PLLC, the firm representing the plaintiffs. “This is a civil rights emergency, and the government is standing by when it should be taking action.”

FHIP — established by Congress in 1992 — provides federal grants to nonprofit fair housing groups that investigate discrimination, educate the public on fair housing laws and support enforcement efforts. Plaintiffs argue that HUD has failed to issue new grants and has declined to distribute already approved funds, disrupting services across the country.

NFHA and TFHC say the consequences have been severe.

NFHA — which represents over 70 nonprofit housing organizations — alleges it is losing out on a second year of funding under its Private Enforcement Initiative (PEI) grant. The group also says HUD’s inaction is preventing it from launching a new fair housing initiative in North Carolina and running community education programs.

TFHC says it will begin terminating staff at the end of June due to the absence of expected grant funds. The organization says the loss of a new PEI grant jeopardizes 85% of its operating budget and could force it to shut down.

“For the past 30 years, TFHC has steadfastly worked for housing justice in Tennessee. We’ve not only helped clients remedy housing discrimination but also engaged in education to prevent housing discrimination,” said Martie Lafferty, TFHC’s executive director. “We’re heartbroken that HUD’s failure to award new FHIP grants is causing TFHC to cut services and are extremely concerned about the impact on potential clients and the community.”

The lawsuit comes amid broader concerns over the Trump administration’s support for civil rights enforcement.

HUD has yet to release a Notice of Funding Opportunities for fiscal year 2025, and the administration’s proposed 2026 budget eliminates FHIP funding entirely, NFHA and TFHC added.

“As Dr. Martin Luther King stated, ‘justice delayed is justice denied.’ The Trump administration has been intentional in its efforts to chip away at, delay and deny critical civil rights that are codified into law,” said Lisa Rice, president and CEO of NFHA. “Fair Housing has always enjoyed strong bipartisan support but now, the Trump Administration is refusing to abide by the budget appropriations decisions taken by Congress, which it is required to do.

“Allowing these actions to go unchecked is dangerous for our country and disastrous for the thousands of vulnerable individuals and families, including disabled veterans, seniors, survivors of domestic violence, families with children, people of color and others throughout the nation, who are left without key fair housing protections.”

Rice added that HUD’s actions undermine ongoing efforts to expand affordable housing and promote homeownership and housing stability.

Relman Colfax is also representing NFHA and other organizations in a separate lawsuit filed in March in federal court in Massachusetts. That case challenges HUD’s termination of existing FHIP grants.

“The law requires this funding, but beyond that, morality demands it,” Colfax said. “When the government withholds critical civil rights funding, real people suffer. These are families denied justice, communities stripped of protection, and frontline organizations forced to go dark. Every day that passes without support puts lives, rights, and futures at risk.”