Democratic AGs sue HUD over fair housing guidance

Rob Bonta California Attorney General
California Attorney General Rob Bonta.
Bloomberg News
  • Key insight: A group of 16 state attorneys general, all Democrats, have filed suit against the Department of Housing and Urban Development over a recent guidance limiting enforcement of equal housing laws.
  • Supporting data: The attorneys general say the guidance, which affects how HUD funds state investigations of discrimination complaints, threatens $10.7M in Fair Housing Access Program funding.
  • Forward look: The case could have serious implications for states' freedom to enact and enforce more expansive versions of federal fair housing laws. 

A coalition of Democratic attorneys general, led by California Attorney General Rob Bonta and Illinois Attorney General Kwame Raoul, filed a lawsuit Monday challenging a September guidance from the Department of Housing and Urban Development narrowing the scope of the agency's fair housing enforcement mandate. 

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The outcome of the case could have significant ramifications for states' ability to enforce fair housing laws, including their ability to field complaints and assess mortgage lenders' compliance with state fair lending and discrimination standards. California and Illinois, in addition to the other 14 states in the litigation, have extended the universe of protected classes for housing discrimination beyond the federal protected classes of race, religion, age, sex, national origin or disability. 

"HUD issued guidance to agencies threatening to decertify them from the program and cut off funding unless they stop enforcing crucial protections against housing discrimination based on sexual orientation, gender identity, language, criminal records and source of income," Raoul said during a press conference announcing the lawsuit. "The guidance also bars agencies from pursuing claims targeting housing practices that may be discriminatory based upon disparate impact on certain populations."

The case, filed in the U.S. District Court for the Northern District of California, centers on guidance issued by HUD in September 2025 regarding the Fair Housing Assistance Program, through which HUD distributes money to state and local agencies to fund investigations into housing discrimination complaints under state laws. HUD first began to provide funding to assist state and local agencies in enforcing fair housing laws in 1980. 

The guidance states that "Resources Must Be Redirected to Cases with the Strongest Evidence of Intentional Discrimination." The memo argues previous administrations wrongfully took an expansive interpretation of enforcement of fair housing law, and directs HUD's Office of Fair Housing and Equal Opportunity staff to concentrate on the most blatant complaints involving federally protected characteristics, like race, religion, sex or nationality. 

"Previous enforcement directives, based on ideology but not statute, rendered it 'impracticable' to complete investigations in a timely manner," the HUD guidance states. "Such enforcement actions prioritized novel and tenuous theories of discrimination concerned with appraisal bias, environmental justice, local zoning, screening for felony convictions, and gender identity, among others."

"These investigations … will no longer be prioritized," the memo concludes.

The lawsuit argues the guidance — issued pursuant to President Trump's executive order barring "disparate impact" analyses for antidiscrimination laws — violates the Administrative Procedure Act and the Appropriations Clause of the Constitution. AG Raoul says the guidance also threatens HUD's power to refer discrimination complaints to state attorneys general if those states have more expansive antidiscrimination laws than the federal standard. 

"The Trump administration is now seeking to illegally undermine this partnership by attacking states' ability to combat housing discrimination under their own democratically enacted state laws," Raoul said in a press conference announcing the move. "In Illinois and many other states, these Fair Housing protections are enshrined in state law. HUD is attempting to impose vague, ideologically motivated and unlawful conditions on program funding."

The attorneys general say the HUD policy forces states to choose between enforcing civil rights protections under their own laws or preserving federal funding and complaint referrals. AG Bonta said California alone could lose about $3 million if the guidance takes effect; the total amount of lost funding across all states joining the suit is roughly $10.7 million.

Bonta said he expects the suit to receive an expedited review. 

"We're thinking weeks, not months," he said. 


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