HB 1696: Covenant Homeownership Program

The Covenant Homeownership Program (Program) provides down payment and closing cost assistance to first-time homebuyers who are part of an economically disadvantaged class of persons identified in a Program study. The Program is funded through a $100 document recording assessment that is deposited into a dedicated Program account. The Legislature may appropriate moneys in the Program account to the Department of Commerce (Commerce) for costs related to the Program. Commerce must contract with the Washington State Housing Finance Commission (Commission) for the creation of one or more SPCPs to provide down-payment and closing-cost assistance to Program participants. At minimum, an SPCP authorized under the Program must provide loans that can be combined with other forms of down payment and closing cost assistance, require Program participants to repay loans for down payment and closing cost assistance at the time that the house is sold, and be implemented in conjunction with the Commission's housing finance programs. To be eligible to receive down payment and closing cost assistance through an SPCP authorized as part of the Program, an applicant must have a household income at or below 100 percent of the area median income (AMI), be a first-time home buyer, and be a

Washington resident who: was a state resident on or before the enactment of the FHA on April 11, 1968, and was or would have been excluded from homeownership in Washington by a racially restrictive real estate covenant on or before that date; or is a descendant of a person who meets that criterion.

The initial Program study was published in March 2024, and recommended implementing an SPCP for economically disadvantaged households with Black, Latino, Native American, Alaska Native, Native Hawaiian, Other Pacific Islander, Korean, or Asian Indian borrowers. The initial Program study also recommended that the new SPCP should provide down payment assistance as a zero-interest loan, and provide customized amounts of down payment assistance that would enable households with incomes between 80-100 percent of the AMI to afford a modest-cost home in their county. Some of the other recommendations were to consider expanding eligibility to impacted residents with incomes up to 140 percent of the AMI and to consider alternative repayment approaches, such as forgiving all or some portion of the assistance amount over time.

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