New York Attorney General Letitia James sued the federal government Wednesday over $56.1 million in nationwide housing counseling funds that she says the U.S. Department of Housing and Urban Development failed to award before the fiscal year ended. New York expected roughly $1 million for 22 counseling organizations across the state.
The lawsuit, filed on Sept. 30, sought to preserve the congressionally approved money before a midnight deadline. James' office said thousands of New Yorkers could lose help with buying homes, avoiding foreclosure or eviction, and managing rent and household finances if the funding is not delivered.
The filing is a challenge to HUD's handling of the program, not a court ruling. A judge's response and the funding's status after the deadline were not provided in the attorney general's announcement.
State says application went unanswered
According to the attorney general's office, HUD opened applications in March and indicated awards were expected by Aug. 3. New York applied May 22, and HUD confirmed the application was complete, but the state says it never received the expected award.
The state Housing Finance Agency has received up to $1 million annually for the program since 2013. It distributes the federal funding to 22 HUD-certified organizations, which typically receive between $20,000 and $100,000 each year, the attorney general's office said.
James argues that HUD's failure to distribute the money conflicts with federal housing-counseling and appropriations laws. Her office says Congress rejected a proposal to eliminate the program and funded it in a law signed in February. Those are allegations in the lawsuit and have not been resolved by the court.
On Sept. 25, the White House announced a late request to rescind nearly $1 billion in federal spending, including the housing-counseling appropriation, according to James' office. The administration has criticized some grant recipients over their stated views on housing. The lawsuit disputes whether those views provide a lawful basis to withhold the funds.
Potential impact in New York
James' office estimates more than 7,000 New York households could lose access to one-on-one counseling and nearly 2,800 could lose financial assistance to improve their housing conditions. It cited the program's 2024 work helping prevent more than 250 evictions and nearly 300 foreclosures in the state, while aiding almost 300 first-time buyers who closed on homes.
The suit asks a court to declare HUD's actions unlawful and preserve the funding so the state can receive an award. The federal government has not had its arguments adjudicated in the case, and the figures describing households at risk are the state's estimates, not confirmed losses.
The announcement did not identify which of the 22 counseling organizations serve individual Finger Lakes counties or specify whether any local office had already reduced service. Residents seeking help should not assume an existing program has closed based solely on the lawsuit.
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