HUD Opens Fair Housing Probe Into Washington's Race-Based Home Loan Program

HUD is investigating Washington State's Covenant Homeownership Program over claims that taxpayer-backed housing benefits are being distributed by race and ancestry.

Mar 26, 2026

Washington Democrats sold the Covenant Homeownership Program as a moral correction for past discrimination. Now the Trump administration is asking a very basic question: does a state program that hands out zero-interest loans based on race violate federal fair housing law? You already know why that question matters.

The U.S. Department of Housing and Urban Development has opened a formal investigation into Washington State's Covenant Homeownership Program, according to a letter first reported by The Center Square. The program offers down payment and closing cost help through 0 percent interest loans. The catch is eligibility. To qualify, a buyer must meet income and first-time homebuyer rules and also trace ancestry to groups the program says were harmed by historic housing discrimination.

That is where the whole thing stops sounding like equal protection and starts sounding like government deciding who counts.

What HUD Is Investigating

HUD Assistant Secretary Craig Trainor told the Washington State Housing Finance Commission that publicly available information suggests the program may be unlawful under the Fair Housing Act. In his letter, Trainor wrote that the commission appears to believe some Washingtonians "are more equal than others" and said the program seems to distribute benefits based on race and ancestry.

"Illegal discrimination on the basis of race is morally reprehensible, socially perverse, and destructive of America's pluralistic polity," Trainor wrote. "The Trump administration will not tolerate it."

HUD Secretary Scott Turner backed that up in a public statement, saying HUD will enforce the law and protect equal opportunity for all Americans seeking housing assistance.

This is not some fringe complaint. It is the federal agency charged with enforcing fair housing law looking at a state program that openly sorts applicants by ancestry.

How the Program Works

Washington lawmakers created the Covenant Homeownership Program in 2023 through House Bill 1474. The bill's stated purpose was to address the history of racially restrictive covenants and related discrimination in Washington housing. A state-commissioned study in 2024 argued that historic discrimination still contributes to lower homeownership rates for several minority groups.

The program is funded through a $100 document recording assessment on real estate transactions. According to reporting from The Center Square, the program distributed $60.2 million in loans to 547 homebuyers in its first year. The state's program materials say the recording fee is expected to generate roughly $75 million to $100 million annually.

Here is the short version:

Loans are offered at 0 percent interest for down payment and closing costs.
Applicants must be first-time homebuyers.
Household income limits apply.
Eligibility depends in part on whether the buyer, parent, grandparent, or great-grandparent lived in Washington before 1968 and belonged to one of the approved racial groups.
In 2025, Democrats expanded the program and added loan forgiveness for some lower-income participants after five years in the home.

Because of course a government program built on racial classifications did not stay small.

The State's Defense

Supporters say the program is a lawful special purpose credit program designed to remedy documented disparities. The executive summary for the state-backed Covenant Homeownership Program Study says Washington was an active and passive participant in discriminatory housing practices and that the resulting wealth and homeownership gaps still exist today.

That study pointed to lower homeownership rates among Black, Latino, Native American, Alaska Native, Native Hawaiian and Pacific Islander residents, along with Korean and Asian Indian residents. The program website says it was created to make homeownership more accessible for people impacted by state-sanctioned housing discrimination.

Those arguments are not trivial. Historic discrimination was real. Restrictive covenants were real. Redlining was real. But acknowledging that history does not magically erase current law. The federal question is whether the government can remedy past wrongs by using fresh racial preferences right now.

Chief Justice John Roberts answered that question pretty clearly years ago: the way to stop discrimination on the basis of race is to stop discriminating on the basis of race.

Why This Fight Matters Beyond Washington

This case matters because progressive states keep trying to revive race-based policymaking under new labels. They call it equity. They call it restoration. They call it targeted opportunity. Fine. Call it whatever you want. If the state is deciding who gets financial benefits by race and ancestry, people notice.

And voters notice too.

President Trump ran on restoring equal treatment under law and dismantling the bureaucratic DEI machinery that divided Americans into preferred and disfavored classes. This HUD investigation fits squarely inside that promise. It also sends a message to every state agency tempted to play amateur constitutional lawyer with taxpayer dollars.

Reasonable people can agree that homeownership matters. They can agree that Washington has a painful history. What they should not accept is a government system that answers one injustice by creating another.

The Numbers That Jump Out

$60.2 million in loans reportedly distributed in the first year
547 homebuyers assisted in that period
$75 million to $100 million in expected annual revenue from the recording assessment
Up to 120 percent of area median income now allowed in the expanded program

That is not a symbolic pilot program. That is a sizable state-backed benefits machine.

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