New WA Fair Housing Report Calls for Loan Programs for Marginalized Homebuyers

In the Spring of 2023, Washington lawmakers wanted the state to look into ways to remedy racial disparities in homeownership. The goal is to find ways to lending solutions to help more buyers be successful, especially those for whom housing policies and practices created barriers to credit and homeownership for historically marginalized communities in Washington and how those actions continue to impact these communities today.

It’s called the Covenant Homeownership Act, and it requires the Washington State Housing Finance Commission (WSHFC) to complete or commission a study to inform the development of a new Special Purpose Credit Program (SPCP). The aim is to help remedy racial disparities in homeownership and access to credit.

After documenting historical discrimination in housing and its impacts on current homeownership opportunities in Washington, the group analyzed how well current programs are working, and recommended new approaches to lingering inequities.


Among the recommendations:

  • Move forward immediately with the Federal Special Purpose Credit Program, for economically disadvantaged households with Black, Latino, Native American, Alaska Native, Native Hawaiian, Other Pacific Islander, Korean, or Asian Indian borrowers.
  • Provide customized amounts of down payment assistance that enable households with incomes between 80-100% AMI to afford a modest-cost home in their county.
  • Consider one of two models that effectively balance program cost and housing choice.
  • Provide down payment assistance as a zero-interest loan

Under the Covenant Homeownership Act, this program would provide new source of loan funding for homebuyer assistance and mandates that the SPCP provide loans for down payment and closing cost assistance to program participants.

In order to qualify, applicants must;

Have a household income at or below 100 percent of the Area Median Income (AMI),

Be a first-time homebuyer

Has been a Washington resident before the enactment of the Federal Fair Housing Act on April 11, 1968, and was, or would have been, excluded from homeownership in Washington by racially restrictive covenants.

Special Purpose Credit Programs were authorized by Congress under the Equal Credit Opportunity Act of 1974 (ECOA) as a tool to counteract centuries of unfair laws and policies that deprived millions of consumers of the right and opportunity to access fair mortgages and credit. They essentially are targeted lending programs designed specifically to help an economically disadvantaged group of people who, under customary standards of creditworthiness, might not receive credit or would receive it on less favorable terms than are ordinarily available to other consumers applying for a similar type and amount of credit.

As such, Congress ensured that these programs serving an economically disadvantaged group may consider race or ethnicity without violating ECOA’s prohibition on discrimination in order to “increase access to the credit market by persons.