HUD Probes Washington Race-Based Homebuyer Loan Program
Washington handed out $60.2 million in zero-interest homebuyer loans through a program limited by race and ancestry. HUD is now investigating.
The Trump administration just opened a fair housing investigation into Washington state’s Covenant Homeownership Program, and it is not hard to see why. The program offers zero-interest loans for down payments and closing costs, but only to buyers tied to a list of favored racial categories. In other words, Washington found a way to take money from everybody and reserve the benefit for some people. Then federal officials noticed.
According to The Center Square, HUD Assistant Secretary Craig Trainor told the Washington State Housing Finance Commission that publicly available information suggests the program may violate the Fair Housing Act. HUD Secretary Scott Turner put it even more plainly: DEI is dead at HUD. That is not just a slogan. It is now an enforcement posture.
What the program actually does
Washington lawmakers created the Covenant Homeownership Program in 2023 and later expanded it in 2025. The state says it is trying to address the legacy of racially restrictive housing covenants and other historic discrimination. That is the justification. The actual structure is where things get interesting.
According to the program’s public materials and the reporting, eligible buyers can receive:
Zero-interest loans for down payment assistance
Help with closing costs
Expanded eligibility up to 120 percent of area median income in some cases
Loan forgiveness after five years for some lower-income participants
The catch is not small. To qualify, a buyer must have a parent, grandparent, or great-grandparent who lived in Washington before 1968 and who fits one of the state’s listed racial or ethnic categories, including Black, Hispanic, Native American or Alaska Native, Native Hawaiian or other Pacific Islander, Korean, or Asian Indian.
So yes, this is exactly the sort of race-based sorting the federal government is now challenging.
The numbers do the roasting
Washington’s own materials make the scale hard to ignore.
The Center Square reported that the commission handed out $60.2 million in loans to 547 homebuyers in the program’s first year. Those loans are funded by a $100 document-recording assessment charged on real estate transactions. The program’s own FAQ says that fee generates roughly $75 million to $100 million each year.
Think about that for a second.
A state fee imposed broadly across the market. A benefit allocated narrowly by ancestry and race. And officials are surprised federal civil rights lawyers are taking a look.
That is the part progressives always skip. They talk about justice in the abstract, then design programs that treat equal protection like an annoying technicality.
Why HUD says this matters
Trainor’s reported letter did not dance around the issue. According to The Center Square, he wrote that the program appears to dole out benefits based on race and ancestry, and he cited the Fair Housing Act’s ban on discrimination in real estate.
He also invoked Chief Justice John Roberts’ line that the way to stop discrimination on the basis of race is to stop discriminating on the basis of race. Hard to improve on that. It was true when the Supreme Court said it. It is still true when Washington progressives decide their preferred discrimination is morally upgraded discrimination.
HUD’s position appears to be simple:
The state may not use race as a shortcut for public policy
Historical wrongs do not create a blank check for new racial preferences
Housing assistance has to comply with federal civil rights law
That is not radical. That is called reading the law.
Washington’s argument, and the problem with it
The state program’s website frames the policy as a corrective to Washington’s history of racist covenants and redlining. That history is real. Nobody needs to pretend otherwise. But acknowledging past injustice is not the same thing as giving government permission to resurrect racial classifications in a shinier package.
The state’s own FAQ reportedly says some groups were chosen because researchers found lower homeownership rates and stronger documentation of historical harm. Other groups, such as Jewish residents, were not included because the data was more limited.
Read that again.
Government officials are effectively deciding which ancestry groups count enough, which ones do not, and which families get access to taxpayer-backed housing aid. If that sounds like a terrible power for government to have, that is because it is.
And from a Christian and conservative perspective, the moral problem is obvious. The answer to old favoritism is not new favoritism. The answer to past discrimination is equal treatment under the law. Anything else becomes a permanent machine for political sorting.
The bigger political message
This story also matters because it shows what the Trump administration is trying to do across federal agencies. For years, blue states and bureaucracies hid race-preference policies behind euphemisms like equity, targeted investment, and restorative opportunity. Same engine. Better marketing.
Now HUD under President Trump is saying the quiet part out loud: if your program excludes Americans on the basis of race or ancestry, expect scrutiny.
Secretary Turner’s statement, as reported by The Center Square, made that clear:
"I will not stand for illegal racial and ethnic preferences that deny Americans their right to equal protection under the law."
That is the right posture. Fair housing should mean fair housing. Not fair housing for the categories the state likes this year.
What happens next
The Washington State Housing Finance Commission is already facing a separate federal lawsuit over the program, and a judge reportedly denied a preliminary injunction earlier this year. That means the program has kept moving while the legal fight continues. HUD’s investigation raises the stakes.
If federal investigators conclude the commission violated fair housing law, the Office of Fair Housing and Equal Opportunity could file a complaint and pursue charges. At minimum, Washington now has to defend a policy that many Americans will recognize immediately for what it is: race-based government favoritism with nicer branding.
And that is the larger lesson here. Once government starts deciding who gets help based on skin color, ancestry, or approved grievance categories, equal protection stops being a principle and becomes a prop.
That may play well in a DEI workshop. It plays a lot worse when federal investigators show up with the Fair Housing Act.