WA program to address housing discrimination faces lawsuit

SEATTLE – Washington’s pioneering homebuyer assistance program for people targeted by decades-old racist housing policies faces a legal challenge.

The New York-based Foundation Against Intolerance and Racism, a national nonprofit that has advocated against diversity efforts at universities and other organizations, brought the case Tuesday against the head of the Washington State Housing Finance Commission.

The lawsuit claims the commission and executive director Steve Walker are violating some homebuyers’ constitutional rights by limiting who qualifies for the program. Because the assistance is not open to homebuyers of all races, the lawsuit alleges the program violates the equal protection clause of the 14th Amendment.

“Washington’s impossibly high housing costs don’t discriminate – they price people of all races out of homeownership,” the Pacific Legal Foundation, which is representing FAIR, said in a statement.

The commission defended the program in a statement, saying it was the “result of rigorous research.”

The program is designed “to serve the needs of first-time homebuyers whose families were deliberately shut out of homeownership in the name of segregation,” the commission said.

The case centers on the Covenant Homeownership Program, which state lawmakers approved last year in an effort to address the lasting effects of racist housing policies from the early 1900s. Among them are racially restrictive covenants that often limited properties to only white buyers and are present in the records of tens of thousands of properties across the state.

Launched this summer, the program offers down payment and closing cost assistance to people who are Black, Hispanic, Native American, Alaska Native, Native Hawaiian or other Pacific Islander, Korean or Asian Indian. To qualify, homebuyers must show that they or a parent, grandparent or great-grandparent lived in Washington before the Fair Housing Act outlawed housing discrimination in April 1968.

Applicants must also make the area median income in their county or less, about $147,000 per household in King County. The program is open to first-time homebuyers under a broad definition that also includes people who owned a home more than three years ago or have only owned a mobile home.

The commission was considering expanding who can apply for the program, including potentially allowing “applicants outside the currently approved racial groups who are able to show past and ongoing impact by state-supported discrimination,” though timing remains unclear.

To offer the financial help, the state provides zero-interest loans that buyers repay when they sell or refinance the home. Fees paid on recorded real estate documents fund the program.

According to the lawsuit, FAIR “has members who are ready, willing and able to purchase a home” in Washington but are ineligible for the assistance program “based purely on their race.”

In particular, a potential homebuyer living in Washington who the lawsuit calls “A” meets all of the program criteria except that she “identifies as European-American,” according to the complaint.

The complaint claims the state has failed to show that “remedial action” is necessary in response to racial discrimination and that the state “has not attempted to implement any race-neutral alternatives.” The lawsuit seeks a court ruling requiring that the state operate the program “without regard to the race of applicants.”

The housing finance commission already administers at least five other statewide down-payment assistance programs available to people of all races with various other criteria to qualify. Yet, while 68% of white Washingtonians own their homes, the homeownership rate is just 32% among Black residents and 48% among Hispanic residents, according to 2022 data, the latest available.

“Race-neutral approaches, which we and others have tried for many, many years, aren’t closing the racial homeownership gap,” Walker told The Seattle Times in June.

In designing the program, Washington state officials appeared to be bracing for potential legal challenges, commissioning a nearly 200-page report to lay out the history of housing discrimination in Washington, potential designs for the down-payment program and analyses of who should qualify.

While many people experienced discrimination, the report authors said the qualifying racial groups “are still being impacted most deeply.”