The U.S. Department of Housing and Urban Development has launched a formal compliance review of Washington state’s Covenant Homeownership Program, putting the race‑conscious down‑payment assistance plan under a federal microscope for possible Fair Housing Act violations. The move raises the stakes in a brewing showdown over a state program built to help families whose ancestors were blocked from buying homes before 1968.
HUD Opens Formal Review
According to The Seattle Times, HUD’s Office of Fair Housing and Equal Opportunity notified the Washington State Housing Finance Commission that it has opened a compliance review, questioning whether the Covenant program’s race‑conscious eligibility rules square with federal law. The department’s announcement comes amid a broader administration effort to scrutinize and roll back DEI‑style programs; HUD Secretary Scott Turner has publicly declared that “DEI is dead at HUD,” a statement reported by WUNC. Federal officials say the review will kick off with document requests and interviews with state staff.
How The Covenant Program Works
The Covenant Homeownership Program, which launched July 1, 2024, offers zero‑interest secondary loans to help first‑time buyers cover down payments and closing costs, according to the Washington State Housing Finance Commission. WSHFC says buyers must show that they or a direct ancestor lived in Washington before April 11, 1968, and that the original rules tied eligibility to local area median income. A program FAQ explains that in 2025 the Legislature amended the law to raise the income ceiling and add a loan‑forgiveness option for lower‑income buyers, laying out the revised income thresholds and forgiveness rules in detail. WSHFC FAQ
Legal Challenge And Court Action
The Covenant program has been in court since October 2024, when the Foundation Against Intolerance and Racism sued the commission, arguing that the program unlawfully restricts eligibility based on race; the complaint is on file with the Pacific Legal Foundation. Pacific Legal Foundation While that lawsuit moves forward, a federal judge recently declined to issue a preliminary injunction that would have halted the program in the meantime, a development noted in a February 2026 industry bulletin from the National Council of State Housing Agencies. NCSHA
State Response And Next Steps
The Washington State Housing Finance Commission says it plans to cooperate with federal information requests while standing behind the program’s mission, emphasizing that the Covenant is just one of several down‑payment assistance tools it administers, The Seattle Times reported. Commission materials stress that the program was built to address longstanding racial gaps in homeownership, and administrators say they will turn over records and context to HUD as the review unfolds. Both the compliance process and the federal court case are expected to stretch out over months while each side gathers evidence and refines legal arguments.
What The Investigation Could Mean
HUD compliance reviews typically open with document requests and staff interviews and can end with a conciliation agreement, administrative enforcement, or a referral for litigation if the agency concludes the Fair Housing Act has been violated. Civil‑rights groups and housing advocates warn that weakening disparate‑impact standards would make fair‑housing enforcement more complicated and have pushed for strong federal oversight; a joint comment from the National Fair Housing Alliance and partner organizations spells out those stakes. National Fair Housing Alliance
Why This Matters For Washington Homebuyers
Backers of the Covenant program say it is aimed squarely at the damage left by century‑old exclusionary covenants and note that it has already helped hundreds of households buy homes; industry reporting estimates roughly 1,200 households have been served so far. NCSHA The federal review, paired with the ongoing lawsuit, now leaves prospective buyers, current participants, and state lawmakers waiting to see whether federal enforcement, litigation, and national politics will reshape a program designed to address historic barriers to homeownership.
