wa-law.org > bill > 2025-26 > HB 2153 > Original Bill
The legislature finds that homeownership is a cornerstone of economic stability, family security, and generational wealth. State-funded down payment assistance programs exist to open the door to homeownership for individuals and families who might not otherwise have that opportunity. These programs are funded with limited public dollars, and their success depends on ensuring that assistance is distributed fairly, transparently, and in a manner that reaches as many qualified first-time homebuyers as possible.
The legislature further finds that in recent years, instances of "stacking" multiple state-funded down payment assistance programs have reduced the overall reach of these investments. While each program was created with good intentions, they were not designed to provide multiple overlapping assistance to a single buyer. When one homebuyer receives more assistance than needed to successfully purchase a home, another family waiting for help is left without a path forward.
It is the intent of the legislature to reaffirm the original purpose of these programs: To expand access to homeownership, not concentrate benefits. By limiting homebuyers to one state-funded down payment assistance loan or grant, the state can responsibly stretch limited resources, support a greater number of first-time homebuyers, and uphold the public's trust in the integrity of these programs.
The community reinvestment account is created in the state treasury. Revenues to the account shall consist of appropriations and transfers by the legislature and all other moneys directed for deposit into the account. Moneys in the account may be spent only after appropriation.
Expenditures from the account may be used by the department of commerce for:
Economic development, which includes addressing wealth disparities to promote asset building such as homeownership and expanding access to financial resources including, but not limited to, grants and loans for small businesses and entrepreneurs, financial literacy training, and other small business training and support activities. However, a homebuyer is prohibited from receiving multiple state-funded down payment assistance loans or grants from any programs created under this section or RCW 43.185A.140 or 43.181.040. A homebuyer who applies for down payment assistance loans or grants under multiple state-funded programs, or for multiple down payment assistance loans or grants under one state-funded program, is only eligible to accept one state-funded loan or grant offer;
Civil and criminal legal assistance to provide postconviction relief and case assistance, including the expungement of criminal records and vacation of criminal convictions;
Community-based violence intervention and prevention services, which may include after-school programs focused on providing education and mentorship to youths;
Reentry services to facilitate successful transitions for persons formerly incarcerated in an adult correctional facility or juvenile residential facility in Washington; and
Beginning July 1, 2025, agricultural and economic support and services available to historically marginalized communities.
The distribution of the grants under this section must be done in collaboration with "by and for community organizations" as defined by the department of commerce and the office of equity. For the 2025-2027 fiscal biennium, "by and for community organizations" include, but are not limited to, those operated by and for Black, Latino, Native American, Asian, Native Hawaiian, and Pacific Islander communities.
The department must use moneys from the housing trust fund and other legislative appropriations to finance in whole or in part any loan or grant projects that will provide affordable housing for persons and families with special housing needs and who are low-income households.
At least thirty percent of these moneys used in any given funding cycle must be for the benefit of projects located in rural areas of the state as defined by the department. If the department determines that it has not received an adequate number of suitable applications for rural projects during any given funding cycle, the department may allocate unused moneys for projects in nonrural areas of the state.
The department must prioritize allocating at least, but not limited to, 10 percent of these moneys used in any given funding cycle to organizations that serve and are substantially governed by individuals disproportionately impacted by homelessness, including black, indigenous, and other people of color and, lesbian, gay, bisexual, queer, transgender, and other gender-diverse individuals.
Activities eligible for assistance from the housing trust fund and other legislative appropriations include, but are not limited to:
New construction, rehabilitation, or acquisition of low and very low-income housing units;
Preconstruction technical assistance, design and finance services and consultation, and administrative costs for eligible nonprofit community or neighborhood-based organizations;
Administrative costs for housing assistance groups or organizations when such grant or loan will substantially increase the recipient's access to housing funds other than those available under this chapter;
Shelters for the homeless, including emergency shelters and overnight youth shelters;
Down payment or closing costs assistance for low-income first-time homebuyers. However, a homebuyer is prohibited from receiving multiple state-funded down payment assistance loans or grants from any programs created under this section or RCW 43.79.567 or 43.181.040. A homebuyer who applies for down payment assistance loans or grants under multiple state-funded programs, or for multiple down payment assistance loans or grants under one state-funded program, is only eligible to accept one state-funded loan or grant offer;
Acquisition of housing units for the purpose of preservation as low-income housing;
Projects making affordable housing projects more accessible to low-income households with members who have disabilities; and
Remodeling and improvements as required to meet building code, licensing requirements, or legal operations to residential properties owned and operated by an entity eligible under RCW 43.185A.040, which were transferred as described in RCW 82.45.010(3)(t) by the parent of a child with developmental disabilities.
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Legislative appropriations from capital bond proceeds may be used for the costs of projects authorized under subsection (4) of this section, except for costs of subsection (4)(c) of this section.
The department may use up to three percent of the appropriations from capital bond proceeds or other new appropriations for affordable housing investments for administrative costs associated with application, distribution, and project development activities of the affordable housing program.
Reappropriations must not be included in the calculation of the annual funds available for determining the administrative costs.
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Moneys received from repayment of housing trust fund loans or other affordable housing appropriations may be used for all activities necessary for the proper functioning of the affordable housing program, including, but not limited to, providing preservation funding, as provided in RCW 43.185A.180, and preconstruction technical assistance as provided in RCW 43.185A.170.
Administrative costs associated with compliance and monitoring activities of the department may not exceed four-tenths of one percent annually of the contracted amount of state investment in affordable housing programs.
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. However, a homebuyer is prohibited from receiving multiple state-funded down payment assistance loans or grants from any programs created under this section or RCW 43.79.567 or 43.185A.140. A homebuyer who applies for down payment assistance loans or grants under multiple state-funded programs, or for multiple down payment assistance loans or grants under one state-funded program, is only eligible to accept one state-funded loan or grant offer;
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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;
For a program participant who has a household income at or below 80 percent of the area median income for the county where the home is located at the time that the loan is made, a special purpose credit program authorized under this section may fully forgive a loan entered into at any time after enactment of the special purpose credit program once the loan has been outstanding for at least five years; and
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 120 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.