HUD Investigates Washington State Homeownership Program for Fair Housing Act Violations
Summary
HUD has launched an investigation into Washington State's Covenant Homeownership Program to determine if it violates the Fair Housing Act. The program offers downpayment and closing cost assistance but requires applicants to have specific racial or ethnic ancestry, which HUD believes may constitute unlawful discrimination.
What changed
The Department of Housing and Urban Development (HUD) has initiated an investigation into the Washington State Housing Finance Commission's Covenant Homeownership Program. HUD alleges that the program, which provides financial assistance for first-time homebuyers based on racial or ethnic ancestry, may violate the Fair Housing Act's prohibition against housing discrimination. The program's eligibility criteria appear to exclude individuals of European, Japanese, Arab, or Jewish descent, while prioritizing those with Black, Hispanic, Native American, Pacific Islander, or Indian ancestry.
This investigation signifies a potential shift in HUD's enforcement priorities, emphasizing a strict interpretation of anti-discrimination laws. Regulated entities, particularly those involved in housing finance or offering programs with demographic-based eligibility, should review their policies and practices to ensure compliance with the Fair Housing Act and other civil rights legislation. While no specific compliance deadline is mentioned, the investigation implies a need for immediate review of such programs to avoid potential enforcement actions.
What to do next
- Review eligibility criteria for all housing assistance programs to ensure compliance with the Fair Housing Act.
- Assess whether any programs utilize racial or ethnic preferences that could be deemed discriminatory.
- Consult legal counsel regarding the implications of this investigation for state and local housing finance programs.
Source document (simplified)
1. News
2. HUD Launches Fair Housing Investigation into Washington State’s Covenant Homeownership Program
HUD Launches Fair Housing Investigation into Washington State’s Covenant Homeownership Program
FHEO is launching an investigation to determine if the Washington State Housing Finance Commission’s Covenant Homeownership Program violates the Fair Housing Act, which prohibits discrimination in housing.
Washington, DC - The Department of Housing and Urban Development’s (HUD) Office for Fair Housing and Equal Opportunity (FHEO) notified the Washington State Housing Finance Commission that it has launched an investigation into the state’s Covenant Homeownership Program, which HUD believes may violate the Fair Housing Act.
In 2023, the Commission announced a “Racial Equity Strategy Plan” to advance “antiracist priorities.” One year later the Commission launched the Covenant Homeownership Program, its first-ever openly race-based housing finance program.
“DEI is dead at HUD. Those who ignore the law and violate the rights of Americans for political purposes will not continue,” said Secretary Scott Turner. “As HUD Secretary, I will not stand for illegal racial and ethnic preferences that deny Americans their right to equal protection under the law. HUD will work to ensure Washington state follows the law and provides equal opportunity for all citizens seeking assistance under the Commission’s programs. Under President Trump’s leadership, HUD will vigorously enforce the Fair Housing Act and ensure all Americans have an equal shot at the American Dream.”
The Covenant Homeownership Program offers downpayment and closing cost assistance for first-time homebuyers through a zero-interest, secondary loan on a home mortgage. Applicants do not need to be low income, as the income ceiling is 120% of the area median income. Low-income borrowers qualify for complete loan forgiveness after owning the house for five years. To qualify for the program, applicants must have a parent or grandparent of black, Hispanic, Native American, Pacific Islander, or Indian descent. Persons of European, Japanese, Arab, or Jewish ancestry do not appear to qualify.
HUD’s investigation fulfills President Trump’s promises to protect the civil rights of all Americans and to ensure affordable housing that is free from unlawful discrimination for all Americans. Read the full letter notifying the Washington State Housing Finance Commission of HUD’s investigation here.
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