Washington state launched a new housing program last month offering interest-free loans of up to $150,000 based solely on a prospective homebuyer's race.
The Covenant Homeownership Program, which will launch July 1, 2024, will provide homebuying assistance to Washingtonians who suffered discrimination before 1968, when the Fair Housing Act was passed.
To be eligible for the program, a person must have a household income less than 100% of the Area Median Income (AMI) for the county in which the home is located, be a first-time homebuyer, the buyer or their parents, grandparents or great-grandparents must have lived in Washington state before April 1968, and 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 member of their family must have lived in Washington state before April 1968 because state officials said discrimination remained despite the passage of the Fair Housing Act. But because discrimination remained, the state had no official or legal role in enforcing or maintaining the new law.
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Washington State Capitol in Olympia (David Ryder/Getty Images/File)
The program also excludes other groups who may have been discriminated against, such as Jews.
“The initial eligibility criteria for the Covenant Program are intentionally narrow. Many racial, ethnic, and religious groups have been subject to unjust and egregious housing discrimination in Washington, and the Covenant Program takes into account this history as well as its current impacts,” the Washington Housing Finance Board states on its website. “Some groups that have experienced discrimination have much lower rates of homeownership compared to the general white population, and these are listed in the initial eligibility criteria. However, for other groups (such as Jewish residents), data is limited in terms of documenting the lasting impacts of historical discrimination.”
The program gives qualified homebuyers the opportunity to apply for a 0% interest loan through a lender to fund their down payment and closing costs.
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Homes for sale in the West Seattle area on June 18, 2024. (David Ryder/Bloomberg via Getty Images)
If approved, the borrower pays a $100 fee for deeds and receives the loan. The loan does not have to be repaid until the new homeowner sells or refinances the property.
Homeowners who earn below the AMI must meet a broad definition of a first-time homebuyer: For example, people who haven’t owned a home for at least three years, people who only own mobile homes, and single parents who only owned a home while married to their previous spouse all qualify as first-time homebuyers.
The Seattle Times reported that the program comes as the US faces racial disparities in homeownership in areas such as Seattle.
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This photo shows a home for sale on June 18, 2024 in the West Seattle neighborhood. (David Ryder/Bloomberg via Getty Images)
A Washington-sponsored investigation found that the federal government, as well as state and local officials in Washington, are complicit in housing discrimination.
Examples include forcing Native Americans off their land, excluding Black people in the 1800s, and imprisoning Japanese Americans and others in the 1900s.
Washington state has tried to increase homeownership rates through other programs, but housing disparities remain across the state. While the Covenant Homeownership Program is race-based, the state has other programs in place to help people of all races buy a home.
Still, in 2022, the homeownership rate for Black people in Washington was just 32%, while the Hispanic homeownership rate was 48% and the white homeownership rate was 68%, the Post reported.
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Homes for sale in West Seattle neighborhood on June 18, 2024. (David Ryder/Bloomberg via Getty Images)
Fox News Digital reached out to the Washington State Housing Finance Commission.
“A race-neutral approach will not close the racial homeownership gap,” agency Executive Director Steve Walker told The Seattle Times.
When the covenant homeownership program passed last year, lawmakers largely stayed along party lines, with Republicans voting against the bill and Democrats voting in favor.
Republicans expressed concern about the cost of the fees that fund the Covenant program.
A $100 fee for archiving documents funds the program, and the state has raised more than $20 million since January, far less than the $75 million to $100 million expected each year, Walker told the publication.
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The funding gap could be due to a troubled housing market where many people are not buying or selling homes.
Still, the accumulated funds will only allow the state to fund about 130 loans with $150,000 down payment, the Journal reported.
Washington isn't the only state implementing or considering housing assistance programs to help boost homeownership rates.
In California, lawmakers passed a bill in the state Senate on Tuesday that would allow undocumented immigrants to apply for the “California Dream for All” first-time homebuyer financial assistance program.
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The program offers first-time homebuyers down payment assistance of up to 20 percent of the home's price, or up to $150,000, and mandates that the California Housing Finance Agency's Home Buying Assistance Program, or California Dream for All program, include undocumented applicants.
The bill now goes back to the California Assembly for consideration of amendments made by the Senate.
Fox News Digital's Jasmine Baer contributed to this report.
