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WA program to help first-time homebuyers with history of discrimination

Washington is undertaking a novel new attempt to address decades of housing discrimination.

The state launched a program Monday offering homebuying assistance to Washingtonians who faced housing discrimination in the early to mid-20th century and their descendants.

Qualifying homebuyers can now apply through their lenders for zero-interest loans to help fund down payments and closing costs. The loans, funded by a fee on recorded real estate documents, do not need to be repaid until the homeowner sells or refinances the property.

An explicit effort to redress the lasting effects of discrimination, the Covenant Homeownership Program could help hundreds of people of color become homeowners in Washington but may also face legal challenges.

The assistance focuses on people who may have been subject to racially restrictive covenants, one of the various tools of housing discrimination that were common across America in the early 1900s. The widely used documents in property deeds often barred people of color and Jewish people from certain properties.

Researchers from the University of Washington and Eastern Washington University have documented tens of thousands of Washington properties once covered by racial covenants. In many cases, the covenants remain on the books today, although they are no longer enforceable. 

The new assistance is open to Washingtonians who can show either that they lived in the state before April 1968, when the Fair Housing Act outlawed housing discrimination, or that they are the descendant of a parent or grandparent who lived in the state at that time.

State guidelines allow homebuyers to qualify if they are Black, Hispanic, Native American, Alaska Native, Native Hawaiian or other Pacific Islander, Korean or Asian Indian.

While various groups, including Jewish people, experienced “well-documented, egregious acts of discrimination,” the qualifying groups “are still being impacted most deeply” or face notable homeownership gaps, wrote the authors of a state-commissioned study, whose findings informed the design of the program.

Homebuyers must make the area median income in their county or less, about $147,000 per household in King County, and must meet a broad definition of first-time homebuyers. That includes people who haven’t owned a home in at least three years, have only owned a mobile home, or are single parents who only owned a home while married to a former spouse.

To qualify, homebuyers should ask their mortgage lender about the program or call the state’s homeownership hotline at 1-877-894-4663. Lenders will work with buyers to verify their family history documentation.

State responsibility

The effects of restrictive covenants and other types of housing discrimination have been far-reaching in America, contributing to a racial gap in homeownership and cementing the segregation patterns that shaped cities like Seattle. 

The state-sponsored study found that the federal government was not alone in enforcing discriminatory practices. State and local authorities in Washington contributed to housing discrimination, too, from the forced removal of Native Americans and exclusion of Black people in the 1800s to zoning schemes, “sundown town” policies, Japanese American incarceration and more in the 1900s. County auditors across the state recorded the racially restrictive covenants that limited some properties to only white owners.

Washington has attempted to boost homeownership in other ways. The state already offers various homebuyer assistance programs open to people of all races. Yet disparities persist. Just 32% of Black Washingtonians and 48% of Hispanic residents owned their homes in 2022, the latest data available, compared with 68% of white people in the state.

“Race-neutral approaches, which we and others have tried for many, many years, aren’t closing the racial homeownership gap,” said Steve Walker, executive director of the Washington State Housing Finance Commission, which is administering the new program.

State lawmakers approved the new assistance when they passed House Bill 1474 last year. The vote split largely along party lines with Republicans voting no, citing concerns about the cost of the fee that will fund the program.

“I’m worried as we very incrementally keep increasing the cost of things like the document recording fee… that we just keep increasing the cost of housing,” state Rep. April Connors, R-Kennewick, a real estate agent, said before the vote.

In order to target homebuyers affected by discrimination, the state is using a special purpose credit program, which allows lenders to offer credit assistance to people who’ve experienced economic disadvantages. Given backlash to affirmative action and other “race-conscious” programs,…

Read More: WA program to help first-time homebuyers with history of discrimination

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