HUD Opens Fair-Housing Probe Into Washington’s Race-Conscious Homebuyer Aid

Overview

• HUD’s fair-housing office, which opened the investigation Tuesday, ordered record preservation, assigned its Special Investigations unit, and warned it could bring charges or refer the case to the Justice Department.
• The Covenant Homeownership Program offers zero-interest second loans for down payments and closing costs, limits income to 120% of area median income, ties eligibility to certain ancestries with pre-1968 Washington residency, and HUD says people of European, Japanese, Arab, or Jewish ancestry do not appear to qualify.
• The program reported $60.2 million in loans to 547 buyers in its first year and draws money from a $100 document-recording fee that state materials say brings in $75 million to $100 million a year.
• HUD Secretary Scott Turner denounced racial preferences as illegal, while the Washington State Housing Finance Commission said it will cooperate and noted it also runs broader programs that serve all low- and moderate-income buyers.
• For buyers and lenders, the commission says operations continue during the probe, after a separate lawsuit failed to win a preliminary injunction, and the outcome could guide how other states design remedies for past housing discrimination.