wa-law.org > bill > 2025-26 > HB 1696 > Substitute Bill
As part of the covenant homeownership program, the department shall contract with the commission to design, develop, implement, and evaluate one or more special purpose credit programs to reduce racial disparities in homeownership in the state by providing down payment and closing cost assistance. The contract must authorize the commission to use the contract funding as follows:
The contract must authorize the commission to use up to one percent of the contract funding for costs related to administering the program including, but not limited to, costs related to completing a covenant homeownership program study required under RCW 43.181.030, and other administrative, data collection, and reporting costs;
The contract must authorize the commission to use up to one percent of the contract funding to provide targeted education, homeownership counseling, and outreach about special purpose credit programs created under this section to black, indigenous, and people of color and other historically marginalized communities in Washington state, including outreach to relevant affinity groups for mortgage lenders; and
The contract must authorize the commission to use the remainder of the contract funding to provide down payment and closing cost assistance to program participants. This portion of the contract funding may not be used to provide any type of assistance other than down payment and closing cost assistance.
The commission shall create one or more special purpose credit programs to provide down payment and closing cost assistance for the benefit of one or more economically disadvantaged classes of persons identified in a covenant homeownership program study under RCW 43.181.030. In creating a special purpose credit program, the commission must consider the evidence-based documentation and programmatic and policy recommendations set forth in the initial covenant homeownership program study and any subsequent program studies. If the covenant homeownership program study identifies an economically disadvantaged class or classes of persons that share one or more common characteristics such as, race, national origin, or sex and the board of the commission finds it necessary to consider this information in tailoring a special purpose credit program to provide credit assistance to economically disadvantaged classes of persons, the commission may consider these characteristics in designing and implementing the program.
At minimum, a special purpose credit program authorized under this section must:
Provide loans for down payment and closing cost assistance to program participants that can be combined with other forms of down payment and closing cost assistance;
(i) Except as provided in (b)(ii) of this subsection, require a program participant to repay loans for down payment and closing cost assistance at the time that the house is sold;
Be implemented in conjunction with the commission's housing finance programs.
To be eligible to receive down payment and closing cost assistance through a special purpose credit program authorized under this section, a special purpose credit program applicant must:
Have a household income at or below 140 percent of the area median income for the county where the home is located;
Be a first-time homebuyer; and
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(A) Was a Washington state resident on or before the enactment of the federal fair housing act (Title VIII of the civil rights act of 1968; P.L. 90–284; 82 Stat. 73) on April 11, 1968, and was or would have been excluded from homeownership in Washington state by a racially restrictive real estate covenant on or before April 11, 1968; or
(B) Is a descendant of a person who meets the criteria in (c)(i)(A) of this subsection;
ii. Records that show a person's address on or about a specific date or include a reference indicating that a person is a resident of a specific city or area on or about a specific date may be used to provide proof that a person satisfies the criteria in (c)(i) of this subsection, such as genealogical records, vital records, church records, military records, probate records, public records, census data, newspaper clippings, and other similar documents.
The commission may adopt rules, and shall adopt program policies, as necessary to implement this section. Program rules or policies must include procedures and standards for extending credit under the special purpose credit program, including program eligibility requirements. From time to time, including in response to a covenant homeownership program study's evaluation of program efficacy, the board of the commission may amend the special purpose credit programs, rules, and policies.
By July 1, 2024, one or more of the special purpose credit programs must begin providing down payment and closing cost assistance to program participants.
By December 31, 2025, and by each following December 31st, and in compliance with RCW 43.01.036, the commission shall submit an annual report to the appropriate committees of the legislature on the progress of the special purpose credit program or programs developed under this section. The report shall include, at minimum, the program eligibility requirements, the type and amount of down payment and closing cost assistance provided to program participants, the number of program participants and their corresponding eligibility categories, the location of property financed, and program outreach efforts. The report must be posted on the commission's website.
The department of financial institutions shall establish the covenant homeownership program oversight committee consisting of the following members appointed by the governor, except for the legislative members who must be appointed by the president of the senate or the speaker of the house of representatives as described in this section:
One person who meets the eligibility criteria for the special purpose credit program described in RCW 43.181.040(4) and is from east of the crest of the Cascade mountains;
One person who meets the eligibility criteria for the special purpose credit program described in RCW 43.181.040(4) and is from west of the crest of the Cascade mountains;
One representative of an organization that operates a special purpose credit program, counseling service, or debt relief program that serves persons who were commonly subject to unlawful exclusions contained in racially restrictive real estate covenants as defined in RCW 43.181.010;
One representative of a nonprofit organization that provides housing counseling to persons who were commonly subject to unlawful exclusions contained in racially restrictive real estate covenants;
One representative of the real estate sales profession;
One representative of the home mortgage lending profession who has a minimum of five years' lending or underwriting experience;
One representative of the nonprofit affordable housing development industry;
Two senators, one from each of the two largest caucuses, appointed by the president of the senate; and
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Nonlegislative members shall each serve a three-year term, subject to renewal for no more than one additional three-year term. The oversight committee shall develop rules that provide for the staggering of terms so that, after the first two years of the committee's existence, the terms of one-third of the nonlegislative members expire each year.
Legislative members shall each serve a two-year term, subject to renewal for no more than one additional two-year term.
On the expiration of the term of each member, the governor, president of the senate, or the speaker of the house of representatives, as authorized under subsection (1) of this section, shall appoint a successor to serve for a term of two years if the successor is a legislative member, or three years if the successor is a nonlegislative member.
The governor may remove a nonlegislative member of the oversight committee for cause. The president of the senate may remove a senator serving as a legislative member of the oversight committee for cause, and the speaker of the house of representatives may remove a member of the house of representatives serving as a legislative member of the oversight committee for cause.
Vacancies on the oversight committee for any reason must be filled by appointment as authorized under subsection (1) of this section for the duration of the unexpired term.
The oversight committee:
Shall oversee and review the commission's activities and performance related to the program, including the commission's creation and administration of one or more special purpose credit programs authorized in RCW 43.181.040;
Shall work with the department of financial institutions to convene meetings, create a charter and operating procedures, and to coordinate the oversight committee's ongoing activities;
Shall convene the initial meeting of the oversight committee and select a chair by October 1, 2023;
Shall work with the department of financial institutions to convene a meeting at least once a quarter and may hold additional meetings at the call of the chair or by a majority vote of the members of the committee;
May conduct its meetings by conference telephone call, videoconference, or using similar technology that enables all persons participating in the meeting to hear each other at the same time; and
May, from time to time, make recommendations to the appropriate committees of the legislature regarding the program.
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The oversight committee is a class one group under RCW 43.03.220. Except as provided in (b) of this subsection, members of the committee receive no compensation for their services as members of the committee but may be reimbursed for travel and other expenses in accordance with rules adopted by the office of financial management.
As authorized by RCW 43.03.220, the department of financial institutions may provide a stipend to individuals who are low income or have lived experience to support their participation on the oversight committee.
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The department of commerce and the commission shall work together to supply the oversight committee and the department of financial institutions with any information requested by the oversight committee or the department of financial institutions that the oversight committee or the department of financial institutions deems necessary for the committee to carry out its duties under this section. This information may include, but is not limited to, books, accounts, records, policies, procedures, files, and information from relevant third parties.
Any information shared among the oversight committee, the department of financial institutions, the department of commerce, and the commission that is confidential and exempt from public disclosure under RCW 42.56.270 shall remain confidential when received by the receiving party.
The department of commerce and the commission must report to the oversight committee on a quarterly basis. The report must address the results of targeted education, homeownership counseling, and outreach efforts by the department of commerce as authorized under this chapter, and the results of any special purpose credit program formed by the commission under this chapter, and down payment and closing cost assistance to program participants.
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The department of financial institutions shall:
Provide subject matter expertise, administrative assistance, and staff support to the oversight committee; and
Work in coordination with the department of commerce and the commission to conduct outreach and financial education to the communities served by this chapter, in accordance with RCW 43.320.150.
The department of financial institutions may:
Have one or more staff present at oversight committee meetings;
Employ staff necessary to carry out the purposes of this section; and
Hire outside experts and other professionals it deems necessary to carry out its duties under this section.
The department of commerce shall reimburse the department of financial institutions for costs related to the oversight committee from the moneys that the legislature appropriates to the department of commerce for this purpose from the covenant homeownership account under RCW 43.181.020(1).