Housing providers that specialize in sheltering some of the nation's most at-risk people are entering an era of even greater uncertainty while they await a decision about the future of a program that governs $4B in spending.

Nearly $2B in multifamily rent payments are at stake as a judge deliberates changes to the U.S. Department of Housing and Urban Development's Continuum of Care program, leaving the organizations responsible for spending the money searching for clarity as they apply for a fresh round of funds.

“Because of the new program rules, they may not know exactly what they're anticipating to get based on their applications,” National Association of Housing and Redevelopment Officials General Counsel Georgi Banna said.

The CoC program has been tied up in court since last year over proposed changes by the Trump administration that would limit how much money can go to permanent housing, a major shift from the program's longtime strategy. The move could threaten housing stability for as many as 97,000 households, according to NAHRO Director of Policy and Legislative Affairs Eric Oberdorfer.

More than a dozen states filed suit after the 2025 notice of funding opportunity was released in November. A judge halted the funding process as developers and housing providers scrambled to find stopgaps for the lost money.

The judge in the case ruled on Sept. 16 to restart the funding process, reinstating a Sept. 30 deadline for providers to submit their funding applications. The decision came as a surprise to many in the housing advocacy world, who now had just two weeks to complete their applications.

The CoC program provides funds for cities to support homeless and at-risk populations like domestic violence survivors or disadvantaged teens. More than 1.2 million beds were operating nationwide as part of the program in 2025, including both transitory and permanent housing, according to HUD.

HUD sought to put a 30% cap on what entities can request for permanent supportive housing. The change would result in up to $1.8B in annual rental payments being put at risk, according to Community Solutions, a homelessness prevention nonprofit.

“This would really be a significant shift in how the CoC funding can be spent, and I think there are concerns not only with current projects that might have been in the pipeline, but what happens to the current people that are being served by permanent supportive housing through the Continuum of Care program?” Oberdorfer said.

CoCs aren’t just social service infrastructure. The rent payments they provide are a stabilizing force in multifamily operations, and losing those payments impacts an asset’s performance.

Changes to HUD’s funding structure can mean that landlords whose properties serve as shelter under the CoC program won’t get their rent checks as expected or may see vacancy spikes. Long term, the uncertainty can impact how lenders view these properties, resulting in them offering less favorable loan terms or declining to provide financing at all.

Across the country, CoC dollars support thousands of leases in the private market, from rapid rehousing tenants in Class-B and C multifamily buildings to supportive housing operators like Breaking Ground in New York, Downtown Emergency Service Center in Seattle and Mercy Housing nationally.

Since the legal challenges persist despite the appeals court’s ruling, the drastic changes sought by the Trump administration could go forward.

In New York City, Continuum of Care funding contributes around $200M for the city’s homelessness response, making it an “extremely important and essential” funding source, said Gabbi Sandoval Requena, co-chair of New York's Continuum of Care Board and the vice president of external affairs at New Destiny Housing, which places domestic violence survivors into safe housing. 

Historically, most CoC funds have gone toward permanent housing programs, including permanent supportive housing and rapid rehousing, which provides rental assistance for up to 24 months along with services including a case manager.

The current situation is the worst-case scenario for Sandoval Requena and her organization, she said.

Though she expressed concern for the future of all permanent housing, Sandoval Requena noted that she has an extra layer of concern for rapid rehousing funding. 

“In rapid rehousing, tenants are leasing apartments in the regular market, and if those are leases that the [CoC] entities manage, and if there is no funding to pay for rent, then there is going to be huge impact in the relationships with landlords and property managers that are renting to these households,” she said. 

Though the Sept. 30 deadline stands, the ongoing litigation means there is still a chance the process could change again.

Delays to last year’s funding appropriation are still working their way through the system, adding more uncertainty for some providers awaiting last year’s check.

The 2024 NOFO was also held up in court, but Congress stepped in and required HUD to renew all the existing grants it was supposed to fund. But of the roughly 6,400 grants that were meant to be renewed and funded, only about 5,300 have been fully executed, Banna said.

Those remaining 1,000 or so agencies are still waiting for 2024 funding as questions swirl about 2025 funding. 

A lot of states are trying to figure out how they can backstop lost funding to keep people in their homes. But many states have limited pools of funding from which to draw. 

“The Continuum of Care funding that has been able to fund permanent supportive housing has been really critical for making sure the permanent supportive housing units are funded and are able to continue to house those families in need of those units,” Oberdorfer said. “Taking away that federal subsidy for it, there's just really nothing that can easily step in to replace that."