A federal district court in Washington State denied a claim for a preliminary injunction in a lawsuit to halt a special-purpose credit program aimed at addressing racial disparities in homeownership rates 

Nonprofit advocacy group Foundation Against Intolerance and Racism first filed suit in late 2024 against the Washington State Housing Finance Commission. Founded in 2021, the organization describes its mission as "challenging threats to civil liberties from identity-based practices."

FAIR took issue with the state's covenant homeownership program, claiming it was unconstitutional and in violation of the Equal Protection Clause of the 14th Amendment. 

Justice John Chun sided with the state in denying the motion for an injunction but allowed the case to proceed in a legal filing this week. He noted prior Supreme Court determinations that identified remediation of past discrimination served as a "compelling interest" in denying FAIR's request.

In the study released prior to rollout of the SPCP, researchers pointed to historical examples of discriminatory practices in the Evergreen State that continued to suppress minority homeownership and suggested the need for the program.  

"The court does not accept plaintiff's theory that these past acts of discrimination do not

support a compelling interest because they were not actions taken by the state but a showing of

'societal discrimination,'" Chun wrote. 

"The statistical evidence of discrimination is stark," the judge's ruling also said. 

Along with its constitutional argument, FAIR said injunctive relief was necessary to prevent further erosion of rights that would lead to "irreparable harm." In its arguments, FAIR alluded to a borrower, who wished to buy a home with help from the program, but could not due to her race.

While determining she could otherwise qualify, FAIR did not show, or even allege, that the borrower had attempted to apply for the program. 

"They do not explain how the 'even playing field' injury is irreparable when there is no specific house or opportunity for which its members might lose," the ruling said.  

Representatives from WSHFC declined to comment on the judge's ruling. FAIR had not responded to a request prior to publication.

The Evergreen State's SPCP provides eligible borrowers downpayment and closing cost assistance for first-time buyers as an interest-free loan, which is originated alongside their primary mortgage. Since inception, it has helped 600 individuals buy their first home, with more than 100 currently in the purchase process. 

The role of special-purpose credit programs

SPCPs, which have existed since the 1970s after passage of the Equal Credit Opportunity Act but initially used scarcely, were introduced to provide various types of lending products and community investment for disadvantaged groups who might normally struggle to qualify. 

This decade, though, saw an influx of such programs introduced from both lenders as well as government-sponsored enterprise Freddie Mac, in an effort to address long-existing racial homeownership disparities.

After taking office last year, the Trump administration quickly banned the GSEs from offering the programs, with Federal Housing Finance Agency Director Bill Pulte labeling them "inappropriate." Programs offered by nonfederal housing organizations and lenders were not affected.

Recent changes to federal fair housing, DEI efforts

The Washington State ruling comes as the president continues to roll back government measures enacted by previous administrations intended to bolster fair lending and diversity initiatives. A repeal of the Biden-era's Fair Lending, Fair Housing and Equitable Housing Finance Plans is set to take effect in March.   

It comes after waves of layoffs at government agencies in 2025 focused on the elimination of programs or mandates supporting diversity, equity and inclusion efforts and other policies also considered woke by the Trump administration.

Similarly, Fannie Mae, one of the enterprises overseen by the FHFA, cut several DEI-related positions as well as others deemed "not core" to business operations, according to Director Pulte. 

Other federal officials have moved forward with similar actions, taking aim at jurisdictions supporting racial equity in housing and homeownership. Since December, Department of Housing and Urban Development Secretary Scott Turner has launched investigations into both Boston and Minneapolis for their implementation of race-focused programs.