Bill would expand covenant home ownership, forgive outstanding loans
Feb. 28—OLYMPIA — The move toward rectifying Washington's history of racial segregation in housing could expand, under a bill filed in this year's legislative session by Rep. Jamilla Taylor, D-Federal Way.
HB 1696, sponsored by Taylor and 41 other representatives, would increase the income cap specified in the Covenant Homeownership Program.
The CHP, which went into effect in July, provides down payment and closing cost assistance to groups of people identified in a covenant homeownership program study, according to Taylor. To qualify, a potential home buyer must be a first-time buyer, have lived in Washington before 1968 or be the descendant of someone who did, and be a member of a class that would have been discriminated against in the covenants — city and neighborhood restrictions on races allowed to buy homes there. Those include Black, Latino, Native American, Native Alaskan, Native Hawaiian and other Pacific Islander and Asian Indian and Korean residents, according to the Washington State Fair Housing Commission. Buyers must also have an annual income of 100% or less of the area median income, which in Grant County is $81,800 and in Adams County is $72,700, according to the WSFHC. HB 1696 would increase that figure to 140% of the AMI, or $114,520 in Grant County and $101,780 in Adams County. The CHP is funded by a $100 document recording assessment, according to the house bill analysis.
The CHP was created in response to a 2023 study by Eastern Washington University that identified racially exclusive covenants in property deeds. The study identified more than 40,000 properties in Washington state — more than 80 properties in Grant County and a few in Adams County — that had been purchased with the condition that they never be sold to anyone who wasn't white. Those provisions were already legally unenforceable by the time the properties were built and have no legal validity at all since the Fair Housing Act of 1968, but the documents remain on file as a reminder of historic racism.
"If my father was here in 1965, he would have been prohibited from purchasing homes in particular neighborhoods," State Rep. Jamilla Taylor, D-Federal Way, told the House of Representatives Feb. 10. "Racially restrictive covenants covered not only Black folks, but indigenous folks, Latino folks, Asian folks, and that's shaped many of our communities."
The CHP doesn't remove the documents — that can't be done legally — but it does seek to address disparities in the housing market by offering assistance with down payments and closing costs to people who qualify.
"Homeownership for people of color and other marginalized communities is 19% below that of white households," Taylor wrote in a statement, citing Washington Department of Commerce data, "and the homeownership rate for Black households is even lower."
"A large number of renters who otherwise would be eligible for the Covenant program earned too much to be eligible, but still not enough to afford a modest home in today's market," said Steve Walker, executive director of the WSFHC. "As many first-time home buyers know all too well, even if you earn a higher wage and are in a good position to afford a mortgage, you're going to have trouble saving for the down payment. And when discrimination kept your parents or your grandparents from passing down wealth, you're less likely to be able to rely on family wealth to help you with that down payment."
HB 1696 would also allow a loan to be forgiven after it's been outstanding for five years for borrowers whose income is 80% or less of the AMI.
"Often new homeowners, especially those from historically marginalized communities, find themselves burdened with debt that limits their financial stability," said Dana Le Roy, executive director of Habitat for Humanity Spokane, in House testimony Monday. "Loan forgiveness ensures that home ownership remains a path of building wealth and not a cycle for financial hardship."
"Many of the people in these programs live in urban areas with a cost of housing is (disproportionately) high. Raising the income limit to 140% of AMI only serves to help more people who have been held out of the wealth-building, pride of ownership and community building that home ownership (establishes). Well, we've helped nearly 20 families utilize the Covenant home loan program," said Bryan LaFlamme, a mortgage broker at Movement Mortgage in Tacoma. "We can help a lot more. One couple that comes to mind meets all the eligibility requirements for the Covenant home loan program. However, their income is a bit above 100% of the area median income. They're a professional couple, one working in multi-care and the other's an executive sous chef. Without utilizing the Covenant home loan program they'd be spending around 50% of their gross income on a mortgage and other monthly debt. It's just unsustainable and so they continue to rent We have the opportunity now to ally with these people in a way that most don't."
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