This article is part of the Under the Lens series
Shelter in a Federal Storm: State and Local Housing Solutions for a Time of Federal Hostility
Since the start of the second Trump administration in 2025, federal fair housing enforcement has taken a significant blow. By May 2025, the Department of Housing and Urban Development (HUD) had closed at least 115 federal fair housing cases without resolving them, according to reporting by ProPublica. “To the greatest extent, the federal government is out of business for fair housing and lending,” says Sasha Samberg-Champion, special counsel for civil rights for the National Fair Housing Alliance. “The Department of Justice Civil Rights Division is gone, HUD[’s Office of] Fair Housing … [and] Equal Opportunity is gutted.”
Historically, HUD’s Office of Fair Housing and Equal Opportunity managed reports of housing discrimination under the Fair Housing Act of 1968, which prohibits housing providers from discriminating against tenants or homebuyers based on race or color, religion, sex, national origin, familial status, or disability. HUD was the chief federal agency responsible for collecting reports of housing discrimination and initiating investigations into allegations.
HUD hasn’t done so alone, however. Under the Fair Housing Assistance Program (FHAP)—established by the Fair Housing Act of 1968—the agency has partnered with states and local governments to share the caseload of housing discrimination complaints.
All 50 states have their own fair housing laws as well, which cover at least the same protected categories as the federal Fair Housing Act. Many go beyond the federal act to include categories such as sexual orientation or source of income. There are also local fair housing ordinances, some of which predated and informed the passage of the federal Fair Housing Act. For instance, in 1957, New York City passed the Fair Housing Practices Law, becoming the first city in the U.S. to outlaw discrimination in the private housing market. The Chicago Fair Housing Ordinance, originally passed in 1963, has been amended periodically to include protections for marital status, sex, and disability.
For decades, HUD has granted funding to state and local agencies through FHAP, provided the agencies administer “a law that provides substantive rights, procedures, remedies and judicial review provisions that are substantially equivalent to the Fair Housing Act.” Samberg-Champion explains that HUD would reimburse these agencies for taking on complaints alleging violations of both federal and state fair housing laws. Some states send state-level complaints through their Attorney General’s Office and others through their Department of Human Rights.
Nonprofit housing organizations have also played vital roles in partnering with state agencies to enforce fair housing practices by counseling people with fair housing complaints, referring viable cases to an agency that can litigate them, conducting fair housing testing, and educating residents about their rights and how to take action if those rights are violated. These organizations have traditionally received federal funding for this work through the Fair Housing Initiatives Program (FHIP).
Letter of the Law
In theory, the fact that every state has a fair housing law means that fair housing protections could be enforced even if the federal government abandons its enforcement role. However, enforcement takes resources. Dominic Voz, director of fair housing at Open Communities, a fair housing nonprofit based in Evanston, Illinois, says that while “Illinois has many meaningful protections at the state level,” even before the current federal environment, the state had “few avenues for enforcement outside of a beleaguered state administrative agency.”
In February 2025, fair housing nonprofits were sidelined when over $30 million in FHIP contracts were suddenly terminated. Attorneys representing these organizations filed a lawsuit against HUD and the Department of Government Efficiency (DOGE), and most of the contracts were restored. However, changes in the federal government’s attitude toward fair housing and the application process for future grants have left the fate of these organizations uncertain and precarious.
For fair housing nonprofits, receiving the notice of FHIP termination in February 2025 was a shock—and a call to action. Open Communities was at the end of a contract year when its FHIP grant was terminated, a devastating blow given that HUD provided approximately 50 percent of its annual operating budget. “In that moment, it was evident that we needed to come to terms with this existential threat to survive and enforce fair housing, which is sacred to us,” says Voz. “When an airplane is going down, if you don’t have your oxygen mask on, you can’t help the person next to you.”
While it was able to finish out the FHIP funding in 2025 due to federal litigation against HUD, Open Communities has experienced a funding gap from HUD since May 2025. It was awarded two HUD grants for the upcoming fiscal year, but routine negotiations have been severely delayed due to staffing shortages at the federal level. The organization is unsure when or if the funding stream will start.
Drawing on the power of community, Open Communities and other Illinois-based housing nonprofits have teamed up to share resources and strategize solutions. Open Communities meets weekly with other fair housing organizations in the Illinois Housing Equity Collective to find ways to fill the funding gap while awaiting a resolution on FHIP funding. “We have formed a coalition of fair housing groups in Illinois and plan to ask both our state and local philanthropic groups to step into the void created at the federal level,” says Voz.
Funding cuts to nonprofits are not the only challenge. HUD is also actively targeting states and localities whose fair housing protections are stronger than those included in the Fair Housing Act. Boston—and Massachusetts more broadly—has an expansive fair housing law, which reaches beyond the Fair Housing Act’s nine protected classes. Massachusetts’s protections include discrimination against sexual orientation, gender identity, and whether someone receives public assistance, such as Housing Choice Vouchers.
At the end of 2025, the Massachusetts Commission Against Discrimination, the state agency that investigates housing discrimination complaints, received notice from HUD that it may not be offered a new contract. HUD’s memo indicated that states offering broader anti-discrimination protections than those offered by the federal government would likely be ineligible for federal funds.
In the memo, “HUD wrote the federal Fair Housing Act doesn’t include protections for: ‘sexual orientation, gender identity, and gender expression; source of income; criminal records; weight and height; or limited English proficiency.’ Work done to investigate complaints related to those issues would not be eligible for HUD reimbursements,” as reported by WBUR.
“In order to participate in … FHAP, states need substantially equivalent state or local laws that they are enforcing,” says Samberg-Champion. “In the past, this was considered as a floor, not [a] ceiling. … Now HUD is construing this as a ceiling.”
Many states have more protective anti-discrimination housing laws, often banning discrimination against people because of their source of income, use of housing vouchers, veteran status, or criminal records.
The problems may extend beyond the loss of FHIP funding. HUD has “opened an investigation into Boston and Minneapolis because they say those cities are violating the Fair Housing Act by saying they want to achieve racial equity,” says Samberg-Champion. “It’s very scary for cities and states right now. If they try to do the right thing, HUD will go after them.”
[RELATED ARTICLE: HUD Scolds Boston and Minneapolis for Doing What It Says It Wants Done]
A potential, though rare, consequence of such an investigation is the termination of a city’s Community Development Block Grant (CDBG). In 2024, Boston received more than $17 million in CDBG funding from HUD. “Everyone is operating in the shadow of an administration trying to attack people for doing the right thing. … In practice, it is extremely procedurally onerous and rare for HUD to cut off CDBG funding. I am only aware of a couple of instances in the recent past in which HUD formally moved to do so as a result of a civil rights violation. But I’m sure HUD will be dangling that over the cities while the investigations proceed,” says Samberg-Champion.
How Boston Is Protecting Its Fair Housing Enforcement
Boston is better positioned to protect fair housing than some other jurisdictions for two reasons. First, Boston has more diversified funding for fair housing, meaning the city is less dependent on HUD funding.
One of those funding sources is hospitals. The state attorney general’s office encourages large healthcare institutions to invest in fair housing as part of their community benefits obligations, as fair housing improves the social determinants of health. “Boston is a big hospital town,” says Kathy Brown, executive director of the Boston Tenant Coalition. “When a big hospital wants to do a renovation and wants to give back to the community, they are funding good affordable housing campaigns,” she says.
Second, Boston found a way to integrate the implementation of its fair housing principles into its day-to-day operations, rather than leaving it solely to the complaint-driven system funded by HUD. In 2015, President Obama’s HUD released a rule to implement the Affirmatively Furthering Fair Housing portion of the Fair Housing Act. During his first term in office, President Trump repealed the rule, but Boston implemented it anyway, drafting a robust Assessment of Fair Housing (AFH) that included more than 100 actions. “The implementation of the city’s Affirmatively Furthering Fair Housing Plan is the best thing we have ever won,” says Brown, who held and attended multiple listening sessions with public housing residents to build the plan.
In 2020, Boston’s AFH plan was absorbed into the city’s zoning code, meaning that before receiving zoning approvals, housing developers must consider the potential impacts on residents who have been historically excluded from or marginalized in the neighborhood, and show how they will reduce those impacts.
Large development projects, defined as those that construct or add at least 50,000 square feet of floor space, trigger the ordinance. Developers can choose from several fair housing interventions that would be relevant to the project’s potential impacts. For instance, large developers can provide more units for residents using fair housing vouchers, build more family-size units, or build more affordable units on their premises. Fair housing nonprofits in Boston continue to work to implement this program by collaborating with developers, city council, and the mayor’s office.
Community Reinvestment Laws at the State Level
While the federal government makes enforcing even state and local fair housing laws challenging, other federal regulations may have state equivalents. The Community Reinvestment Act (CRA), enacted by Congress in 1977, for example, is designed to encourage financial institutions to meet the credit needs of the neighborhoods they serve. Banking regulators monitor their progress and can keep banks from merging with each other if their CRA ratings are not high enough. The CRA, a response to redlining, covers both federally chartered banks and thrifts and state-chartered banks.
In October 2023, the Biden administration finalized a comprehensive update to the regulations implementing the CRA. It made the lending test more rigorous, modifying it to reflect changes in modern banking, and encouraged investment in more underserved areas. Due to legal challenges, it has not yet been implemented.
At the beginning of the Trump administration’s second term, the regulators in charge of implementing the CRA—the Federal Deposit Insurance Corporation, Federal Reserve Board, and the Office of the Comptroller of the Currency—came under new leadership and in July 2025 they issued a proposal to rescind the 2023 revisions. The agencies were still reviewing comments on that proposal when this article went to press.
States, however, can pass their own CRA laws: seven states and Washington, D.C., already have, and others are considering doing so. “As we see the federal government repeal previous rules or extend times between examinations, states can push back on that,” says Kevin Hill, senior policy advisor at the National Community Reinvestment Coalition (NCRC). One plus of state CRA laws, Hill adds, is that in addition to state-chartered banks, they can—and often do—cover credit unions and mortgage companies, which the federal CRA statute doesn’t.
Illinois finalized its state-level version of the CRA in 2024, after passing an initial version in 2021. It directly addresses racial discrimination, following a study that showed significant gaps in loans, investments, and branch locations in communities of color across the state. The bill requires the state to conduct studies in Illinois to identify disparities by protected characteristics—notably, race—in access to financial products or services. These findings must then be incorporated into CRA examinations and updated at least every four years.
Hill writes for NCRC, “The Illinois state CRA law, with the addition of the disparity study, provides a model for other states to follow, as well as the federal CRA.”
In late June 2025, New Jersey introduced legislation to create a state-level CRA. Its sponsor, state Sen. Britnee N. Timberlake, said in a press release, “With federal protections fading and corporations extracting wealth without reinvesting, our state must step up to protect vulnerable communities and ensure fair reinvestment where it’s needed most. Modeled after the federal CRA, the state version expands oversight and reinforces commitments to reduce foreclosures and boost lending to small businesses—including those owned by women, veterans, and minorities.” The bill died in committee but has been reintroduced for the upcoming legislative session.
While New York has had a state-level CRA since 1978, it has modified the act’s regulations to include nonbank mortgage companies, effective July 2026. The NCRC provided public comment on the initial proposed rule, suggesting that mortgage companies, state banks, and credit unions also include race as a factor in performance evaluations; take into consideration the cost of loans; and ensure public participation in the CRA evaluation process.
Though it did not go that far, New York’s Department of Financial Services made two changes in response to public comments. First, says Hill, it prohibited the largest mortgage companies from using only a single statewide assessment area. Second, it revised the definition of “community development” to include special purpose credit programs, defined as “any credit program offered by a mortgage banker to meet special social needs which is in conformity with and explicitly authorized by the Equal Credit Opportunity Act.”
NCRC is working with housing nonprofits, advocacy organizations, affordable housing developers, and small business associations to help states mobilize to improve, strengthen, or develop state-level CRAs. Its strategy has been to start in progressive states that are amenable to banking and credit regulation and then expand outward, with the goal of eventually encouraging Congress to adopt the expanded regulations based on state-level successes.
“We want to establish good case studies in these markets,” says Hill. “A lot of times in state legislative campaigns, one question you will get is, ‘Have other states done the same thing?’ We try to create model pilot success stories, which then makes it easier to take them to states that may not be as comfortable [with] adding more regulation.”
The NCRC is currently supporting a New Jersey campaign and working on one in California. Additionally, Hill says, NCRC is working with members to extend New York’s existing CRA law to include property insurance companies. The organization is also working in Massachusetts to find ways for loans and investments for climate adaptation and extreme weather prevention to be eligible for CRA credit under the state’s existing CRA law.
CRA laws at the local level have not run into conflicts with the current federal administration in the same way fair housing laws have. However, CRA laws enacted at the state level apply only to state-chartered banks and institutions; they cannot regulate larger, nationally chartered banks, such as Bank of America or Wells Fargo, even if those banks have branches in those states.
Opportunities for Reinvention Through State Support
While legislation and diversification of funding sources have been alternative avenues for continuing fair housing work in this moment, nonprofits in Illinois are also using HUD’s transitions as an opportunity to pivot and to reinvent the fair housing landscape.
Strategizing for the future of their organizations and fair housing work, housing organizations such as Open Communities and HOPE Fair Housing Center—both of which are coalition members of the Illinois Housing Equity Collective—have reframed their relationship with federal funding and regulation.
This administration has explicitly articulated that HUD funding cannot support any initiatives related to disparate impact in housing, including sex discrimination or discrimination based on criminal background. “With the restrictions on the federal funding, as well as the difficulty of signing into contract with them, we are feeling like the restrictions don’t match our values,” Voz says.
Additionally, HUD funding can be used only to support certain activities, including testing, education, and investigations related to fair housing. While each is a necessary aspect of fair housing work, not every housing organization is best equipped or suited to handle the tailored and complex requirements demanded by HUD grants.
“The federal funds always kind of prevented us from doing things the way we wanted to. For instance, the legal aid plaintiff organizations also had to do testing and intake, but we envision an ecosystem where attorneys are litigating; investigative agencies are doing testing; and social workers are doing outreach, education, and making referrals,” says Michael Chavarria, executive director of HOPE Fair Housing Center in Wheaton, Illinois. “This has always been on our radar, but we’ve never had that push. … Now we have an opportunity to create an ecosystem where everyone has expert-based roles and [is] not wearing all hats.”
Open Communities and HOPE Fair Housing Center, along with the other members of the Illinois Housing Equity Collective, are in the early stages of creating a state pilot program to ask the state of Illinois to provide $5 million per year to support local fair housing protections related to disparate impact cases or state-protected classes under the Illinois Human Rights Act that are no longer supported by the federal government. The collective is gearing up introduce the pilot program to the Illinois legislature in the next session.
“The specialization piece is key,” says Voz. “If we can build a state program to protect fair housing rights in Illinois, it will be much more flexible [than] every organization having to administer a cookie-cutter program of what HUD thinks every fair housing group should do.”
“We want to reinvent ourselves and imagine how to have more expansive, effective, and efficient fair housing services with state funding. It would be not to just respond to the issues in federal funding but [also to] let us respond to the community today. We would coordinate and centralize services and not just duplicate efforts from the federal level,” says Chavarria. “Those things that are no longer protected by federal law are the values of our state and constituents. The state gave us these human rights, but they never stepped up to enforcement, so we are asking them to live up to their promise so we can actually have those human rights.”
In Illinois, the changes at HUD, while exhausting and worrying, are allowing fair housing workers to collaborate and evolve as they take the opportunity to remold the landscape of fair housing in their own state.
“It’s hard work,” says Chavarria. “I’m tired. Everyone who is doing this work is super tired. But during COVID [in May 2022], Illinois was able to pass source of income protections because it opened the eyes of legislators who had previously said no. I know the same thing will happen with this HUD funding. It’s going to take hard work, but we will get it done.”
About the Author
Comments