Court upholds racially targeted SPCP in Washington
A federal judge this week refused to block a special purpose credit program (SPCP) designed to reduce the racial homeownership gap across Washington state, rejecting a constitutional challenge brought by nonprofit Foundation Against Intolerance and Racism (FAIR).
U.S. District Court Judge John H. Chun denied FAIR’s request for a preliminary injunction to halt the Covenant Homeownership Program, finding that the group had not shown a likelihood of prevailing in its lawsuit against the Washington State Housing Finance Commission (WSHFC).
SPCPs were established under the Equal Credit Opportunity Act of 1976. Washington state’s program, launched in 2024, provides assistance with down payments and closing costs and has already reached more than 1,100 first-time homebuyers.
The program specifically targets Black, Latino, Native American, Alaskan Native, Native Hawaiian, Pacific Islander, Korean and Asian Indian families.
FAIR did not immediately respond to HousingWire’s request for comment.
In his ruling, Chun emphasized that Washington state has a compelling interest in addressing a present-day racial disparity in homeownership. He cited the state’s historical participation — both active and passive — in acts of racial discrimination, including redlining, racially restrictive covenants, exclusionary zoning and government takings. His conclusion was supported by a WSHFC-commissioned study.
The judge also rejected FAIR’s argument that its members were harmed by being excluded from the program, noting that other state-sponsored housing options remain available.
The National Fair Housing Alliance (NFHA) welcomed the decision, calling it “a critical affirmation that states can adopt narrowly tailored programs to remedy the well-documented racial harms created by government action.”
“Decades of documented discrimination have created the inequities we see in today’s housing and credit markets,” Lisa Rice, NFHA president and CEO, said in a statement. “Special Purpose Credit Programs are lawful, effective, and essential to ensuring that all people can fairly access safe and affordable credit.”
According to NFHA, between 2022 and 2024, SPCPs helped reduce borrowing costs by $82 million for more than 57,000 consumers of all races. They generated $17.2 billion in economic activity as part of Fannie Mae‘s and Freddie Mac’s Equitable Housing Finance Plans.
The Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, recently announced the repeal of its fair lending, fair housing and equitable housing finance plan regulations.
NFHA warned that without the regulation, “accountability is replaced with voluntary action, putting critical tools like SPCPs at risk of neglect or rollback and jeopardizing the gains they have generated for families denied access to fair and affordable credit.”