Oh for heaven's sake! Does this post really justify five pages of abuse? The OP is not going to jail over this. The husband may be subject to deportation if his visa has expired. ICE may or may not be interested in tracking him down.
On the housing issue, families that include ineligible noncitizens are eligible for assistance. The assistance is pro-rated to exclude the ineligible person(s). Your family now is you, your husband and 2 children, correct? You would be eligible to 3/4 of the assistance you receive now, so your subsidized rent could increase. Google "HUD Handbook 4350.3" and read section 3-12. Note that your husband must pass a criminal background check in order to live in the subsidized apartment. Housing will not report your husband to ICE.
On the welfare issue, welfare recipients marry illegal aliens every day of the week. The illegal alien is not eligible for welfare benefits, but the otherwise-eligible spouse and (separate or mutual) children can continue to receive benefits. When a welfare recipient gets married, he or she is not automatically terminated from the program. Welfare rules vary by state, so research your state's program.
As long as you report your marriage and living situation to welfare and housing, you will most likely be eligible to continue on both programs (however your husband will not qualify for any benefits). Do not conceal your situation.
I don't know where the rest of you live, but in my state hundreds of thousands of illegal aliens live, rent and buy housing, work, operate businesses, get married and have children who are US citizens. For those of you who went loco on the subject, take it up with Congress.