Covenant Homeownership Program

Learn more about the Covenant Homeownership Program

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Covenant Homeownership Program: A Comprehensive Overview

Covenant Homeownership Program: A Comprehensive Overview

The Covenant Homeownership Program is a Washington State initiative launched on July 1, 2024, to help first-time homebuyers impacted by historical housing discrimination achieve homeownership. The program recognizes the state’s role in perpetuating housing discrimination through practices like racially restrictive covenants and seeks to provide redress by assisting descendants of those directly impacted. It provides downpayment and closing cost assistance in the form of a 0% interest loan, secondary to the primary mortgage, which is repaid upon selling or refinancing the home. This article will explore the program’s eligibility requirements, historical context, and program mechanics.

Eligibility:

To be eligible for the program, individuals must meet specific criteria related to their ancestral connection, racial/ethnic background, income level, and homeownership history:

  • Ancestral Connection: The applicant, or their parent, grandparent, or great-grandparent, must have lived in Washington State before April 1968. This date is significant because it marks the passage of the Fair Housing Act, which outlawed racial discrimination in housing. The program aims to address the impact of discriminatory practices that were legal and widespread before this legislation.

  • Racial/Ethnic Background: The pre-1968 resident must identify as Black, Hispanic, Native American, Alaska Native, Native Hawaiian, Pacific Islander, Korean, or Asian Indian. The program initially focuses on these groups because they demonstrate persistent, measurable disparities in homeownership rates compared to the white population, directly linked to past state-supported discrimination.

  • Income Requirement: The applicant’s household income must be at or below 100% of the Area Median Income (AMI) for the county where the property is located.

  • First-Time Homebuyer: The applicant must meet the program’s specific definition of a “first-time homebuyer.” This definition is broad and includes individuals who haven’t owned a home in the past three years, single parents who owned a home only while married, displaced homemakers who owned a home only with a spouse, and those who have only owned a residence without a permanent foundation or a property deemed uninhabitable.

Program Mechanics:

The Covenant Homeownership Program operates as a Special Purpose Credit Program, focusing specifically on groups with persistently low homeownership rates due to past discrimination. Here’s how it works:

  • Downpayment and Closing Cost Assistance: The program provides assistance with down payment and closing costs in the form of a 0% interest loan, secondary to the primary mortgage. This assistance helps eligible individuals overcome one of the biggest hurdles to homeownership.

  • Repayment: The 0% interest loan is repaid upon the sale or refinancing of the home. This ensures that the program’s resources can be used to assist other eligible homebuyers in the future.

  • Homebuyer Education: A free homebuyer education class is required for all program participants. This class provides essential information about the homebuying process, financial management, and homeownership responsibilities, setting up new homeowners for success.

Funding, Administration, and Oversight:

The program is funded through a $100 document recording assessment applied to all real estate transactions in Washington state, starting in January 2024. This fee is specifically designated for the Covenant Homeownership Program, ensuring its sustainability. The Washington State Housing Finance Commission designs, implements, and evaluates the program, while the Department of Financial Institutions provides oversight through a dedicated committee.

Rationale and Justification:

The Covenant Homeownership Program is a crucial step toward achieving housing equity in Washington state. It acknowledges that traditional assistance programs fail to address the deeply ingrained inequities resulting from discriminatory practices, and “colorblind” policies are insufficient to close the racial homeownership gap. The program is grounded in the understanding that homeownership is a powerful tool for building wealth and achieving financial stability, and that historical discrimination continues to have a profound impact on BIPOC communities.

Resources:

Individuals interested in learning more about the program or exploring their eligibility can contact Trevor Roberge, a Senior Loan Originator, for assistance with pre-qualification and navigating the program. Phone: (425) 765-6605, troberge@capstonehomeloans.com

Covenant Homeownership Program FAQ

Who is eligible for the Covenant Homeownership Program?

To be eligible, you must meet the following criteria:

  • Income: Household income at or below 100% of the Area Median Income (AMI) for your county.
  • First-time homebuyer: Meeting specific program definitions (see question 8).
  • Family history: You or a parent/grandparent/great-grandparent must have lived in Washington state before April 1968 and identify as Black, Hispanic, Native American, Alaska Native, Native Hawaiian, other Pacific Islander*, Korean, or Asian Indian.
Why is the residency requirement before April 1968 significant?

The Fair Housing Act, passed in April 1968, outlawed racial discrimination in housing. This date is pivotal because the program aims to address the impact of discriminatory practices that were legal and widespread before this legislation.

Why are only certain racial groups currently eligible?

The program initially focuses on groups demonstrating persistent, measurable disparities in homeownership rates compared to the white population, directly linked to past state-supported discrimination. However, research and potential expansion to include other impacted groups are ongoing.

What if I'm not mortgage-ready but potentially eligible in the future?

Reach out to Downpaymentwa.org and Trevor Roberge for a no-obligation consultation by click on the Learn More Now button or link here.

How do I get started with the application process?

Begin by contacting a Commission-trained lender for mortgage pre-qualification and eligibility assessment. The Homeownership Hotline can connect you with lenders.

For assistance with pre-qualification and navigating the Covenant Homeownership Program, you can contact:

  • Trevor Roberge Senior Loan Originator
  • Phone: (425) 765-6605
  • Complete form here
Where does the funding for this program originate?

The program is funded through a $100 document recording assessment applied to all real estate transactions in Washington state, starting in January 2024. This fee is specifically designated for the Covenant Homeownership Program.

What does it mean to be a "first-time homebuyer" under the program?

The Covenant Homeownership Act has a broad definition. You may qualify if:

  • You haven’t owned a home in the past three years.
  • You’re a single parent who owned a home only while married.
  • You’re a displaced homemaker who owned a home only with a spouse.
  • You’ve only owned a residence without a permanent foundation.
  • You’ve only owned a property deemed uninhabitable.