Over the past few weeks, a series of executive actions by the Trump administration has led to a temporary federal funding freeze affecting a broad range of federal programs. The process began on Jan. 27 when the Office of Management and Budget (OMB) issued a memorandum instructing all federal agencies to “pause all activities related to obligation or disbursement of all Federal financial assistance.” On its face, this memo would freeze trillions of dollars in grants, loans, and other assistance already appropriated by Congress.

The Trump administration then spent the following day narrowing the scope of the announcement by saying that it didn’t apply to programs that provide “direct benefits to Americans,” such as Social Security, Medicare, Medicaid, and “rental assistance.” A series of subsequent notices said FHA single-family mortgage insurance, “Ginnie Mae activities,” and multifamily project-based rental assistance also were excluded from the directive.

The uncertainty over federal funding is significant, as local housing agencies and community organizations depend on federal dollars to pay for routine repairs to major construction projects. Although certain housing programs were later identified as exempt, many housing-related grants and loans were subject to the freeze, causing disruptions.

On Jan. 29, OMB formally rescinded its earlier memo that had ordered federal agencies to pause the disbursement of funds. Despite the technical rescission of the memo, the situation grew more complicated when White House Press Secretary Karoline Leavitt addressed the matter on Twitter. In her post, Leavitt emphasized that while the OMB memo had been rescinded, this action did not equate to a complete rollback of the federal funding freeze. According to her, the underlying executive orders governing federal spending remained in full force and would continue to be rigorously implemented. This clarification led to considerable confusion among agencies and stakeholders who were left uncertain about whether all paused funding had been fully restored or if certain disbursements might still be subject to delay or review.

HUD Response and Developments

In response to the original OMB memo, HUD’s Office of Public and Indian Housing sent a memo to executive directors stating that “HUD is currently reviewing each grant program in accordance with the guidance provided to agencies. The Tenant-Based Rental Assistance Program is no longer subject to the pause. Public housing agencies (PHAs) will receive the February tenant-based rental assistance payments as scheduled.” However, all other grants to PHAs were paused. PHAs could not access critical funding systems like the Line of Credit Control System (LOCCS). This system is used to process grant disbursements. The temporary freeze threatened not only new awards but also the flow of funds needed to maintain existing funding to community development initiatives and support for homelessness programs.

Also, in another email from HUD’s Office of Multifamily Housing Programs, HUD confirmed that rental assistance payments for Multifamily project-based rental assistance remained operational and were not subject to the pause.

With the memo withdrawn, HUD quickly moved to restore operations. In an email, HUD’s Office of Public and Indian Housing notified its executive directors that the Line of Credit Control System (LOCCS) had been reopened, allowing public housing agencies to resume their normal funding processes.

In the end, while the rescission of the OMB memo did restore access to many critical funds, the press secretary’s remarks underscored an ongoing uncertainty in federal funding policy and whether funding flows might become restricted in the future.

Congressional Response 

In the wake of the federal funding freeze, Senators Elizabeth Warren and Tina Smith, both key figures on the Senate Banking, Housing, and Urban Affairs Committee, wrote a pointed letter to the Trump administration. Their correspondence sought immediate clarification on which HUD programs were being affected by the funding freeze and demanded detailed information on the criteria that would determine when or if these programs would resume full operations.

The senators expressed concern over the ambiguity and the potentially far-reaching consequences of the executive actions. They argued that, without clear answers, Americans who rely on HUD grants, loans, and other forms of assistance to secure or maintain safe housing could face serious hardships. The letter criticized what they described as “reckless actions” that not only jeopardize essential services for vulnerable populations but also undermine the constitutional role of Congress in overseeing federal appropriations. The letter emphasized that Congress has the sole power to appropriate funds and that any attempt by the executive branch to unilaterally withhold spending should be scrutinized closely. In their view, the lack of clear communication regarding the affected programs added unnecessary uncertainty.

Legal Challenges to Federal Funding Freeze

The legal landscape surrounding the funding freeze remains unsettled and reflects the disputes about the balance of power between the executive branch and Congress regarding spending priorities. The outcome of these legal challenges could shape the administration’s efforts to control federal spending. So far, federal judges have questioned the administration’s authority to suspend funds that Congress has already appropriated.

In response to the original OMB memo, lawsuits were filed and the federal funding freeze faced a series of legal setbacks. A federal judge in the District of Columbia temporarily blocked the order in response to a lawsuit filed by Democracy Forward. And shortly after, attorneys general in 22 states and the District of Columbia also filed a lawsuit against the order, arguing that President Trump had gone far beyond his legal powers when he moved to “pause” trillions of dollars in funding already allocated by Congress.

And, recently, the 1st U.S. Circuit Court of Appeals rejected the Trump administration’s bid to challenge a lower court’s restraining order against the funding freeze. In its decision, a panel of three appellate judges noted that the Justice Department had not demonstrated any specific harm that would result from leaving the judge’s restraining order in place. The department had sought a pause on the lower court’s order while it continued to challenge the ruling in court, arguing that the order was too vague and that a stay was necessary to avoid disruption.

Timeline of the Federal Funding Freeze Rollout

Jan. 27: Acting Director of the Office of Management and Budget (OMB), Matthew Vaeth, signed a memorandum directing all federal agencies to “temporarily pause the obligation or disbursement of federal financial assistance.”

Jan. 28: The pause was scheduled to take effect at 5:00 p.m. ET. Federal agencies were to immediately halt new obligations, disbursements under open awards, and other funding-related actions.

• Minutes before the freeze, a U.S. District Judge intervened by issuing an emergency order temporarily blocking the implementation of the memo for existing programs.
• OMB issued a clarification memo that stated the pause did not apply to programs not implicated by the president’s executive orders. Programs providing direct benefits such as Social Security, Medicare, SNAP, student loans, and several targeted sectors including small business, Head Start, and rental assistance were not subject to the pause.
• HUD’s email communications indicated that while Tenant-Based Rental Assistance payments (a critical benefit for public housing agencies) would continue as scheduled, all other HUD grants to PHAs were paused until further notice.
• HUD’s Office of Multifamily Housing Programs confirmed that rental assistance payments for Multifamily project-based rental assistance remained operational and were not subject to the pause.

Jan. 29: The Trump administration officially rescinded the OMB memo calling for the funding freeze in response to legal challenges and pressure from advocates and congressional leaders.

• HUD sent an email to executive directors clarifying that the pause ended and that access to LOCCS had been restored.
• Despite the rescission, White House Press Secretary Karoline Leavitt emphasized on social media that this action was a “rescission of the OMB memo” only and not a full rollback of the President’s broader executive orders. In other words, while the immediate pause was undone, the administration’s overall review of federal funding (and potential future freezes on select programs) was still in effect.