Washington state’s Covenant Homeownership Program is under investigation by the U.S. Department of Housing and Urban Development (HUD) over potential violations of the Fair Housing Act.
HUD’s Office of Fair Housing and Equal Opportunity (FHEO) notified the Washington State Housing Finance Commission, which administers the program, of the probe on Tuesday. The investigation comes days after a coalition of 16 attorneys general filed a lawsuit against HUD, alleging the agency is attempting to force states to weaken housing discrimination protections.
“DEI is dead at HUD. Those who ignore the law and violate the rights of Americans for political purposes will not continue,” HUD Secretary Scott Turner said in a statement. “I will not stand for illegal racial and ethnic preferences that deny Americans their right to equal protection under the law.”
In a statement given to HousingWire, a spokesperson for the commission said the program was created by the Washington State Legislature with bipartisan support, stakeholder and community engagement, and was based on independent research conducted by a national firm.
“We will respond to FHEO’s requests for information when received,” the spokesperson said. “Along with the Covenant Homeownership Program, the Washington State Housing Finance Commission has an array of other programs offering home loans and downpayment assistance for all low- and moderate-income homebuyers, so that everyone can be supported on their homeownership journey.”
Launched in 2024, the Covenant Homeownership Program provides a zero-interest secondary loan to help cover down payments and closing costs. It is widely viewed as the first explicitly race-conscious housing finance program of its kind.
To qualify, borrowers must earn no more than 120% of the area median income and have a parent or grandparent who is Black, Hispanic, Native American, Pacific Islander or of Indian descent. According to HUD, individuals of European, Japanese, Arab or Jewish ancestry do not appear to qualify. Loans may be fully forgiven after five years for low-income borrowers.
According to HUD’s letter, the program’s application process involves contacting a hotline to consult with a commission-trained lender for mortgage prequalification and eligibility screening.
“These munificent terms, however, are not for everyone,” HUD states in the letter. “In the Commission’s view, it appears that some Washingtonians ‘are more equal than others.’ This government-sponsored housing experiment appears to dole out spoils based on race and ancestry — ‘some racial groups [are] eligible and not others.’”
HUD said that if it finds reasonable cause to believe the commission has violated or intends to violate civil rights laws, it may file discrimination charges or refer the case to the Department of Justice for enforcement.