HUD launches investigation into race-based Washington housing program

By Tim Clouser
The Center Square

The U.S. Department of Housing and Urban Development launched a fair-housing investigation into the Washington State Housing Finance Commission Tuesday over its race-based Covenant Homeownership Program, a letter first obtained by The Center Square shows.​

Craig Trainor, assistant secretary of HUD’s Office of Fair Housing and Equal Opportunity, notified Steve Walker, executive director of the state Housing Finance Commission, on Tuesday, “pursuant to the Fair Housing Act.” Congress passed the law in 1968 following the assassination of Dr. Martin Luther King Jr.

It prohibits discrimination in real estate based on protected classes, including race and national origin.

“In the commission’s view, it appears that some Washingtonians ‘are more equal than others,’” Trainor wrote in a letter to Walker, quoting a famous line from George Orwell’s 1945 novel Animal Farm. “This government-sponsored housing experiment appears to dole out spoils based on race and ancestry.”

The state Legislature passed a bill in 2023 that created the Covenant Homeownership Program to provide home loans limited to racial minorities. It was framed as a way to address the state’s “history of housing discrimination due to racially restrictive real estate covenants,” according to the final bill report.

Real estate covenants are legally binding rules in a property deed that control how the property can be used and maintained. The Fair Housing Act prohibits restrictive covenants based on race, color, religion or national origin, and the state’s 1969 Washington Law Against Discrimination made them legally null.

“This admittedly ‘groundbreaking’ program is remarkably generous,” Trainor wrote Tuesday to Walker.​

The Covenant Homeownership Program offers 0% interest loans for down payments and closing costs.​

The commission handed out $60.2 million in loans, funded by a $100 document recording assessment on real estate transactions, to 547 homebuyers in the first year. According to the program’s frequently asked questions website, the $100 fee generates $75 million to $100 million annually for these loans.

Democrats expanded eligibility in 2025 for first-time homebuyers with household incomes at or below 120% of the Area Median Income; however, that buyer must have a living or deceased parent, grandparent or great-grandparent that lived in Washington state before 1968 who’s “Black, Hispanic, Native American/Alaska Native, Native Hawaiian or other Pacific Islander, Korean or Asian Indian.”​

The program’s income limit in King County, including Federal Way, Seattle and Bellevue, is $188,500.

The 2025 expansion also provides loan forgiveness to homebuyers with incomes below 80% of AMI after five years of living in the home. To receive assistance under the program, the buyer must work with a “Commission-trained lender to prequalify for a mortgage loan and establish [their] eligibility.”

“Expanding this program is a step toward closing the homeownership gap between Black and white households in our state,” Rep. Jamila Taylor, D-Federal Way, wrote in a news release after Gov. Bob Ferguson signed her expansion into law. “It’s not the only solution … but it is meaningful progress.”

Trainor argued in his letter that the commission doesn’t treat “European, Japanese, Arab, and Jewish ancestry” as equal to the races eligible for the program, which the commission touches on in its FAQ.

“Some of the groups discriminated against continue to show much lower homeownership rates compared with the general white population,” according to the FAQ, which cites a state-funded study into the impacts of discrimination on homeownership. “For other groups (such as Jewish residents), the data is limited when it comes to documenting the lasting impacts of historical discrimination.”​

Walker is already facing a federal lawsuit over the program, but has told lenders to continue as normal until a final ruling. A federal judge denied the plaintiff’s motion for a preliminary injunction last month.​

Trainor told Walker that publicly available information about the program suggests that it’s unlawful.

He argued that the prohibition of racial housing covenants in 1968 predates the commission’s creation, and that “it does not appear” that Washington state issued or denied loans based on race before 2024.​

“Let me be clear: Illegal discrimination on the basis of race is morally reprehensible, socially perverse, and destructive of America’s pluralistic polity,” he wrote. “The Trump administration will not tolerate it.”​

Trainor quoted Chief Justice John Roberts in the 2007 U.S. Supreme Court ruling on Parents Involved in Community Schools v. Seattle School District No. 1, where Roberts argued that, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race,” and again in 2022 when Roberts ruled in another case that, “Eliminating racial discrimination means eliminating all of it.”

The HUD official says he has directed the Office of Special Investigations to look into Washington state for fair housing violations, and that, should the investigation find that the commission violated the law, the Office of Fair Housing and Equal Opportunity may file a complaint and charges of discrimination. ​

Trainor asked that the Washington State Housing Finance Commission preserve any relevant records.

Another Washington state subsidy program called the Community Reinvestment Program offers similar loans “to address racial, economic, and social disparities created by the … war on drugs.” It’s currently facing allegations that the nonprofits controlling the taxpayer-funded loans awarded them to members of their own families, according to reporting by independent journalist Brandi Kruse and The Center Square.​

“DEI is dead at HUD. Those who ignore the law and violate the rights of Americans for political purposes will not continue,” HUD Secretary Scott Turner wrote in a statement. “I will not stand for illegal racial and ethnic preferences that deny Americans their right to equal protection under the law.”

“HUD will work to ensure Washington state follows the law and provides equal opportunity for all citizens seeking assistance under the Commission’s programs. Under President Trump’s leadership, HUD will vigorously enforce the Fair Housing Act and ensure all Americans have an equal shot at the American dream,” Turner concluded.

Margret Graham, communications director for the state commission, declined to comment in an email to The Center Square, as Walker was still waiting on further information from HUD as of Tuesday morning.