Continuum of Care Changes Put $1.8B in Rent Payments at Risk

Housing providers faced a Sept. 30 deadline to apply for a new round of federal homelessness funding through HUD’s Continuum of Care program, according to Bisnow, even as litigation leaves nearly $2 billion in multifamily rent payments in limbo.

The program governs $4 billion in spending, and rules proposed by the Trump administration would sharply limit how much of it can go to permanent housing.

How It Got Here

The Continuum of Care program has faced court challenges since HUD released its 2025 funding notice in November 2025. More than a dozen states sued. A judge then halted the funding process, leaving developers and providers scrambling for stopgaps.

The program funds local efforts that support homeless and at-risk populations. These groups include domestic violence survivors and disadvantaged teens. Historically, most funding has supported permanent housing. That includes permanent supportive housing and rapid rehousing. The latter provides up to 24 months of rental assistance and case management.

On Sept. 16, 2026, the judge ordered the process to restart. The ruling also reinstated the Sept. 30 deadline. Providers now have just two weeks to complete applications. However, ongoing litigation could change the process again.

The Details

HUD sought a 30% cap on requests for permanent supportive housing. That marked a major change from the program’s longtime strategy. Community Solutions, a homelessness prevention nonprofit, estimates the change could put up to $1.8 billion in annual rent payments at risk.

Eric Oberdorfer, director of policy at the National Association of Housing and Redevelopment Officials, said the shift could threaten housing stability for as many as 97,000 households. HUD says the program supported more than 1.2 million beds nationwide in 2025. It also contributes about $200 million to New York City’s homelessness response.

A Backlog From 2024

The 2024 funding round also faced court delays. Congress eventually required HUD to renew existing grants. Of roughly 6,400 grants slated for renewal, only about 5,300 have been fully executed. NAHRO general counsel Georgi Banna said around 1,000 agencies still await 2024 funding.

Earlier in the dispute, a judge blocked the administration’s proposed funding changes. The legal fight has continued.

Why It Matters

Continuum of Care dollars provide a stable rent source for private multifamily owners. They are not just a social services line item. The funding supports thousands of private-market leases. These include rapid rehousing tenants in Class B and C buildings. It also supports operators such as Breaking Ground in New York and Downtown Emergency Service Center in Seattle.

If payments stall, landlords could miss rent checks or face higher vacancies. Prolonged uncertainty could also push lenders to offer less favorable terms. Some may decline to finance these properties altogether.

Gabbi Sandoval Requena co-chairs New York’s Continuum of Care board. She also serves as vice president of external affairs at New Destiny Housing. She called the current situation a worst-case scenario for the organization. She said rapid rehousing faces particular exposure. Tenants lease apartments in the open market, so landlord relationships depend on timely rent payments. The states’ homelessness funding lawsuit remains the key variable.

What’s Next

Providers now await award decisions. However, new program rules leave many unsure about their applications, Banna said. Many states are exploring ways to replace lost funding. Still, they have limited resources available.

Oberdorfer said little could easily replace the federal subsidy for permanent supportive housing if it disappears.