Race-Based Home Loans – DISCRIMINATION?
Washington State launches controversial race-based home loan program offering zero-interest loans up to $150,000 for select racial groups while excluding others.
At a Glance
- Washington’s Covenant Homeownership Program offers 0% interest loans up to $150,000 exclusively to Black, Hispanic, Native American, and select Asian American applicants
- Eligibility requires applicants to have ancestors who lived in Washington before April 1968 and face income restrictions
- The program aims to address racial homeownership gaps, with only 32% of Black residents owning homes compared to 68% of White residents
- Critics argue the program constitutes reverse discrimination by excluding certain groups like Jewish residents
- Recent expansion raises income eligibility from 100% to 120% of area median income and adds loan forgiveness options
Program Details and Eligibility Requirements
Washington state launched the Covenant Homeownership Program on July 1, 2024, creating a system that provides substantial financial assistance exclusively to certain racial groups. The program offers zero-interest loans up to $150,000 for down payments and closing costs to first-time homebuyers who meet specific racial criteria.
To qualify, applicants or their ancestors must have lived in Washington before April 1968 and belong to specified racial categories: Black, Hispanic, Native American, Alaska Native, Native Hawaiian, Pacific Islander, Korean, or Asian American. Additionally, household income must fall below area median income thresholds.
The program’s funding comes from a $100 fee on recorded real estate documents throughout the state. These loans become repayable when homeowners sell or refinance their properties. With current funding levels, the program can only support approximately 130 loans at the maximum amount of $150,000 each. Despite this limited reach, proponents point to the program’s success in helping over 200 families across more than 20 counties access homeownership since its inception.
Racial Disparities and Program Justification
Supporters of the program point to significant homeownership disparities in Washington state as justification for the race-based approach. According to program documentation, white homeownership rates stand at approximately 68-69%, while Black homeownership hovers around 32-34%. Hispanic residents show a 48% homeownership rate. These gaps form the foundation of the program’s stated mission to address historical discrimination in housing that occurred before the 1968 Fair Housing Act prohibited such practices.
“Expanding this program is a step toward closing the homeownership gap between Black and white households in our state,” said Rep. Taylor. “It’s not the only solution to the systemic inequities caused by centuries of discrimination, but it is meaningful progress.”Â
Recent changes to the program include expanding income eligibility from 100% to 120% of the area median income and adding loan forgiveness provisions. Under the new rules, households earning 80% or less of the area median income may qualify for loan forgiveness after maintaining residence in the home for five years, effectively converting the loans to grants for lower-income recipients.
Criticisms and Legal Questions
The program has drawn significant criticism for its exclusionary approach. Critics argue that basing eligibility primarily on race constitutes reverse discrimination and potentially violates equal protection principles. The exclusion of certain historically discriminated groups, such as Jewish residents, has raised additional concerns about the arbitrary nature of eligibility criteria. The Washington Housing Finance Commission has addressed this issue in official statements.
Further objections focus on the program’s approach to addressing historical wrongs. Some critics contend that the initiative rewards individuals who did not personally experience discrimination while penalizing others for actions they did not commit. Meanwhile, similar race-conscious housing programs are emerging in other states, including California’s “California Dream for All” program, which extends eligibility to undocumented immigrants while offering comparable financial assistance.
