A federal investigation has been launched into a Washington state housing program, raising serious questions about potential racial discrimination. The Department of Housing and Urban Development (HUD) announced the probe this week, focusing on the state’s Covenant Homeownership Program and its eligibility criteria.
The program, established in 2023, was designed to address historical housing discrimination rooted in racially restrictive covenants – clauses once common in property deeds that barred sales to people of color. These covenants, though legally unenforceable for decades, left a lasting legacy of inequity.
The Covenant Homeownership Program offered substantial financial assistance to first-time homebuyers, specifically targeting “people of color and other historically marginalized communities.” It provided zero-interest loans of up to $150,000 for down payments and closing costs, with repayment deferred until the property was sold or refinanced.
Legislators who championed the program argued it was a necessary step to rectify generations of systemic barriers to homeownership. They pointed to practices like redlining and discriminatory mortgage policies that historically disadvantaged minority communities, citing evidence of over 40,000 properties across the state with documented racially restrictive covenants.
However, HUD’s investigation centers on the program’s eligibility requirements. The agency noted that applicants were not required to be from low-income areas, with an income ceiling set at 120% of the area’s median income. More critically, the program prioritized applicants with ancestry tracing back to specific groups.
To qualify, applicants needed to demonstrate a parent or grandparent of Hispanic, Native American, Pacific Islander, or Indian descent. HUD raised concerns that individuals of European, Japanese, Arab, or Jewish ancestry were seemingly excluded from eligibility, sparking accusations of reverse discrimination.
The application process itself has also come under scrutiny. Prospective applicants were directed to a hotline where a “Commission-trained lender” determined eligibility, raising questions about consistency and potential bias in the evaluation process.
HUD Secretary Scott Turner issued a strong statement, declaring “DEI is dead at HUD.” He vowed to vigorously enforce the Fair Housing Act and prevent “illegal racial and ethnic preferences” that could deny equal access to housing opportunities.
While a final determination is pending, HUD stated that currently available public information “strongly suggests” unlawful discrimination is occurring. The agency is demanding information from the Washington State Housing Finance Commission to fully assess the situation.
The Washington State Housing Finance Commission has indicated its intention to cooperate with the investigation. They also emphasized the existence of other programs offering assistance to all low- and moderate-income homebuyers, aiming to support a broader range of individuals seeking homeownership.
This investigation is not isolated. HUD has recently initiated similar probes in Minneapolis and Boston, alleging that their housing policies also illegally prioritized resources based on race and national origin, signaling a broader shift in federal oversight of housing programs.
