A program set to launch in July will enable families affected by housing discrimination to get financial assistance for home purchases.
By: Laurel Demkovich – April 29, 2024
Washington has tens of thousands of homes with racially restrictive deeds dating back to the 1960s.
Although modern laws prevent the language from being enforced, the deeds have had long-term effects undermining homeownership opportunities for people of color. A new program, set to launch in a few months, aims to right this wrong.
The Covenant Homeownership Program, which the Legislature passed last year, will begin distributing money in July to first-time homebuyers whose families experienced housing discrimination before 1968.
A new study released last month outlined how the program should move forward, including by taking a “race-conscious” approach.
Doing so can help address the harmful effects of discrimination Washington’s state and local governments caused by allowing language in home deeds explicitly prohibiting people of color from purchasing them.
“A lot of folks don’t understand, while Washington wasn’t a slave-holding state, it did have racialized practices that impacted people of color,” Rep. Jamila Taylor, D-Federal Way, said.
The new program will provide down payment and cost assistance to first-time homebuyers. To qualify, a person’s household income must be at or below 100% of the median income in the area where they live. They also need to have either been a Washington resident before the federal Fair Housing Act of 1968, or a descendant of someone who was.
The cost assistance is funded with a new $100 document recording fee charged on real estate transactions, which went into effect in January. The state estimates the fee will bring in between $75 million and $100 million a year.
‘It really matters’
Before implementing the program, the new law required a study of how it could be most effective. The National Fair Housing Alliance released the report on March 22.
It found that previous state policies allowing racially restrictive deeds were discriminatory and continue to affect Washington’s homeownership rates.
Washington has at least 60,000 properties in nine Puget Sound counties, and even more properties in eastern Washington, with racially restrictive deeds. Work is ongoing to find all of them, said James Gregory, a history professor at the University of Washington and director of its Racial Restrictive Covenants Project.
“As a historian, sometimes history is interesting, and sometimes it really matters,” Gregory said. “This continues to shape housing opportunities and residential patterns throughout our state and throughout our nation.”
Gregory pointed out that the decades during which this language became common were prime years for Americans to buy homes – interest rates were low, government assistance for homebuyers was high and housing construction programs were in full swing.
“Getting locked out of homeownership in those pivotal years has been more or less permanent for many, many people,” Gregory said.
In 2022, 69% of white households in Washington owned homes compared to only 34% of Black households, according to the University of Washington.
The new state report found that the homeownership assistance programs Washington offers have not helped address disparities because they are “race-neutral.” In contrast, a “race-conscious” approach must be taken with the new program, the report says.
As outlined in the law, the program should help borrowers who are Black, Latino, Native American, Alaska Native, Native Hawaiian, or Pacific Islander, Korean or Asian Indian.
The law is rooted in the idea that the government, not personal or private institutions, was discriminatory, Gregory said.
How to access the program
People can start accessing the assistance in July.
To do so, they must prequalify for a loan and take a free homebuyer education class. They can then use one of hundreds of lenders who use home-loan programs under the Housing Finance Commission, according to the commission’s website.
Along with the income requirements, people who are descendants of those who lived in Washington before 1968 must show supporting documents that their families were prevented from buying a home because of a racially restrictive deed.
According to the law, this documentation can include genealogical records, church records, military records, census data or newspaper clippings.
Steve Walker, executive director of the Housing Finance Commission, said the commission is working with the Department of Health and other agencies to ensure that people can easily access the documents they might need.
“Our objective here is not to create barriers to accessing this,” he said.
The amount of down payment assistance a person might get will likely depend on where they are trying to purchase a home and how much it costs. Walker said the commission is working on crafting a program that factors in the living costs in counties across the state.
Taylor said she wants to make sure people have flexibility in where they can purchase a home, so they are not forced to live in specific neighborhoods or cities.
Walker also noted that with Washington’s housing shortage, there needs to be more work to increase the number of starter homes that people who access this program can afford. He said there is a “daunting challenge” ahead of the state in finding ownership opportunities where people want to live.
“There’s so much excitement to begin implementing the program and addressing the harms, but at the same time, we’re all wishing for more inventory,” Walker said.
The study released last month also included new policy recommendations for lawmakers to consider.
The first one that Taylor said she will bring to the Legislature next year is expanding eligibility for the assistance to include residents with incomes up to 140% of the local median income.
Other recommendations include opening the program to those who do not meet the pre-1968 residency requirements but also experienced housing discrimination.
As the program rolls out, Taylor said lawmakers will likely need to refine it.
Legal challenges
Proponents of the program are prepared for possible legal challenges.
Similar homebuyer programs across the country, such as one in San Diego that helps low-income people of color purchase their first homes, have received pushback from people who say it is unconstitutional because it is based on a person’s race.
Taylor said she hopes Washington’s program was designed narrowly enough to withstand a lawsuit.
The state constitution requires race-conscious laws to meet a very high standard, Taylor said.
“We believe we’ve met that standard here in Washington state, and it’s defensible,” she said.
Walker said there is a high legal bar that a public agency needs to meet for programs like this, but the study released last month is an important step in guiding the program’s development.
“The conclusion is that harm was caused through these racially restrictive covenants,” Walker said. “Current approaches to address homeownership disparities have not solved or narrowed the gap of homeownership among populations of color. Therefore, a race-conscious program is the solution. That’s what we’re after.”