Washington state's homeownership program offers loans based solely on race
Washington state launched a new housing program last month that provides loans of up to $150,000 with 0% interest to prospective homeowners solely based on their race.
Launched on July 1, 2024, the Covenant Homeownership Program offers home-buying assistance to Washingtonians who were subject to discrimination before 1968, when the Fair Housing Act was passed.
To be eligible for the program, a person’s household income must be below 100% of the area median income (AMI) of the county where the home is located; the person must be a first-time homebuyer; the buyer or their parent, grandparent or great-grandparent must have lived in Washington before April 1968; and the person who lived in the state must be Black, Hispanic, Native American, Alaska Native, Native Hawaiian or other Pacific Islander, Korean or Asian American.
According to the program’s website, applicants or at least one of their family members must have lived in Washington before April 1968 because state officials said discrimination persisted despite the passage of the Fair Housing Act. But because discrimination remained, the state did not have an official or legal role in enforcing or upholding the new law.
The program also omits other groups that may have been discriminated against, such as Jews.
"The Covenant program’s initial eligibility criteria are intentionally narrowly tailored. While many racial, ethnic and religious groups in Washington were subject to unjust and egregious housing discrimination, the Covenant program considers not only this history but also its current impacts," the Washington Housing Finance Commission said on its site. "Some of the groups discriminated against continue to show much lower homeownership rates compared with the general white population. These are named in the initial eligibility criteria. However, for other groups (such as Jewish residents), the data is limited when it comes to documenting the lasting impacts of historical discrimination."
For those who are eligible, the program gives homebuyers the opportunity to apply for 0% interest loans through their lenders to help fund down payments and closing costs.
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If approved, the borrower will receive a loan paid for by a $100 fee on recorded real estate documents. The loan is not required to be paid back until the new homeowner either sells or refinances the property.
Homeowners who make less than the AMI must meet a broad definition of first-time homebuyers. For instance, people who have not owned a home in at least three years, may have only owned a mobile home or are single parents who only owned a home while married to a previous spouse are all considered first-time homebuyers.
The Seattle Times reported that the program comes as America faces a racial gap in homeownership in places like Seattle.
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A study sponsored by Washington found the federal government as well as state and local authorities in Washington contributed to housing discrimination.
Examples include forcing Native Americans from their lands, excluding Black people during the 1800s and incarcerating Japanese Americans and others in the 1900s.
While Washington has tried to increase homeownership using other programs, disparities continue to exist throughout the state when it comes to housing. Even though the Covenant Homeownership Program is race-based, the state has other programs in place to help people of all races purchase a home.
Still, the paper reported that in 2022, only 32% of Black people in Washington and 48% of Hispanic people owned homes, compared to 68% of White people.
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Fox News Digital has reached out to the Washington State Housing Finance Commission.
The agency’s executive director, Steve Walker, told the Seattle Times that "race-neutral approaches … aren’t closing the racial homeownership gap."
When the Covenant Homeownership Program was passed last year, lawmakers largely stuck to their party lines, with Republicans voting against the measure and Democrats voting in favor of it.
Republicans expressed concerns about the cost of the fee that would fund the Covenant program.
The $100 fee on recorded documents goes toward the program, and since January, the state has collected more than $20 million, much less than the $75 to $100 million projected to accrue each year, Walker told the publication.
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The lack of funding could be because of an awkward housing market in which many people are not selling and buying homes.
Still, with the funding that has built up, the state is only able to fund about 130 down payment loans of $150,000, the paper reported.
Washington is not the only state implementing or looking into housing assistance programs to help boost homeownership.
In California, lawmakers on Tuesday passed a bill through the state Senate that would allow illegal immigrants to apply for their "California Dream for All" first-time homebuyers’ financial assistance program.
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The program awards first-time homebuyers up to 20% of a home's value or up to $150,000 as down payment assistance. It also requires the California Housing Finance Authority's home purchase assistance program, or California Dream for All Program, to include undocumented applicants.
The bill now heads back to the California State Assembly to go over revisions made by the Senate.
Fox News Digital’s Jasmine Baehr contributed to this report.