Judge Sparkle Sooknanan issued a temporary restraining order Monday in the case brought by the National Fair Housing Alliance and the Tennessee Fair Housing Council. The suit was filed in the U.S. District Court for the District of Columbia on June 24.

These funds are approved by Congress and provided to organizations to assist in enforcement of the Fair Housing Act.

Why the organizations sued HUD

"Today's decision is a crucial step in restoring the fair housing infrastructure that millions of people across the country rely on to challenge illegal housing and lending policies and practices and access justice," said Lisa Rice, president and CEO of NFHA in a press release. "The court recognized the real and immediate harm that HUD's actions are causing to fair housing organizations and the communities that depend on them as the nation continues to grapple with a fair and affordable housing crisis."

Even though the suit only has two named plaintiffs, NFHA is a coalition of organizations and this suit was brought on behalf of those members as well, said Reed Colfax, co-managing partner at the law firm of Relman Colfax.

The suit also sought class action status but that has not been granted at this time.

Colfax noted that because of HUD not processing these grants, two organizations had to shut their doors; the funding made up approximately 80% to 85% of their funding.

"Some of the organizations, their funding ended back at the end of May, because not all of these grants are operating on the same fiscal year as the federal government," Colfax said. "In a typical sequence, the funding would have been continuous, it would have ended in May, and then the next year would have started at that point."

Those groups have now been without the funding for at least two months, he said.

Why did HUD ask for the case to be dismissed?

HUD had argued that the case was not ripe for the court until the Sept. 30 funding deadline had passed. But in rejecting that argument, Judge Sooknanan said the Congressionally appropriate funds are no longer available for the current fiscal year.

"And HUD takes the position that the Court has no authority to order that the funds be held or remain available through the conclusion of this litigation," the judge's ruling continued. "If HUD is correct, it is free to ignore duly enacted and constitutional statutes directing it to award millions of dollars in grant funding by a certain date and this Court is powerless to hear the dispute or take steps to ensure compliance with the statutes. That is not the law."

Judge Sooknanan is a former principal deputy assistant attorney general in the Justice Department's civil rights division during the Biden Administration. She was appointed to the bench by Pres. Biden in February 2024 but not confirmed by the Senate until this January.

While HUD can select grant recipients, it cannot refuse to award the money, the judge wrote.

National Mortgage News reached out to HUD for comment.

The ruling notes the plaintiffs are likely to succeed on the merits of some of their claims, based on HUD's reported failure to complete the grantmaking process for the current federal fiscal year. Any ruling on a legal claim regarding in progress multi-year grants, NFHA and TFHC asked the court to defer its ruling until later this week.

HUD told the court it has gotten the ongoing funding process back on track, Colfax said. The affected organizations will be able to restart their work and will get reimbursed starting on Aug. 1.

"We essentially told the judge no need to rule on that aspect of it" for now, Colfax explained.

Why the judge did not grant a blanket TRO

The judge granted NFHA limited relief in the ruling.

"While the Court agrees that the Plaintiffs are entitled to emergency relief, it is not convinced that all of the Plaintiffs' requested relief is appropriate at this time," Judge Sooknanan wrote.

With approximately two months until the Sept. 30 deadline, the judge is ordering HUD to comply with its statutory obligations and come up with a detailed plan to do so.

"If it becomes clear in the coming weeks that HUD will not meet the statutory deadline, the Court will revisit the Plaintiffs' remaining requests," the ruling said. "The Court thus grants in part the Plaintiffs' motion for a temporary restraining order, though on narrower terms than the Plaintiffs requested."

What is the judge calling on the parties to do

The ruling calls on the parties to file a joint status report by July 29; the judge asks in that report to advise if they consent to extending the TRO beyond 14 days. If not, they need to propose an expedited preliminary injunction briefing schedule.

Colfax said his clients' position is that the TRO should be extended until Sept. 30.

HUD has until Aug. 4 to provide a detailed plan on how it will meet its statutory obligations for FHIP funding. Every seven days afterwards, it must describe its progress for new grant awards.