The Foundation Against Intolerance and Racism (FAIR) submitted a complaint on Tuesday against the Washington State Housing Finance Commission (WSHFC) for its Covenant Homeownership Program, which explicitly bars certain applicants from eligibility on the basis of race. The commission cites the 2024 Covenant Homeownership Program Study as empirically justifying its “race-conscious” special purpose credit program, but it’s unlikely to pass strict scrutiny.
The Washington State Legislature passed the Covenant Homeownership Act in May 2023 to remedy “past and ongoing discrimination and its impacts on access to credit and homeownership for black, indigenous, and people of color.” Past discrimination includes 50,000 clauses in home deeds and homeowners associations that were used “between the 1920’s and 1960’s throughout Washington state to restrict housing based on race, religion, and ethnicity,” according to the commission. The Covenant Homeownership’s special purpose credit program offers certain first-time homebuyers a zero-interest rate loan for downpayment and closing cost assistance to address discrimination and reduce the racial disparity in homeownership.
The program raises its revenue by collecting a $100 document recording assessment for real estate transactions, which the commission projected will “generate between $75 million and $100 million each year.” The program is restricted to those Washingtonians whose ancestors (or themselves) were subjected to state-based racial discrimination in housing contracts before the federal Fair Housing Act of 1968.
Further qualifications for the program include earning the area’s median income or less, being a first-time homebuyer, and either being or having an ancestor who was Hispanic, Native American, Alaska Native, Native Hawaiian, other Pacific Islander, Korean, or Asian Indian and lived in the state before April 1968. Limiting access to the program’s special purpose credit program in this way “facially discriminates on the basis of race,” according to the complaint.
WSHFC acknowledges the program’s racial requirements, describing it as going “beyond ‘colorblind’ or ‘race-neutral’ assistance” to allow Washington “to directly remedy the harm caused by its discriminatory policies.” Although the commission insists the program “does not represent a formal reparations effort,” the United Nations, whose definition the commission cites, disagrees. One of the U.N.’s four reparations measures is “compensation…provided for any economically assessable damage, loss of earnings, loss of property, loss of economic opportunities, [or] moral damages.”
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