[The Covenants Homeownership Account Act provides compensation in
the form of substantial mortgage assistance to victims and their
descendants. It was written with a view to overcoming legal challenges
that might derail programs that are overtly race based. Instead, this
law is “harm based.” ]
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BIG WIN FOR VICTIMS OF RACIST RESTRICTIVE COVENANTS  
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James Gregory
May 12, 2023
LAWCHA
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_ The Covenants Homeownership Account Act provides compensation in
the form of substantial mortgage assistance to victims and their
descendants. It was written with a view to overcoming legal challenges
that might derail programs that are overtly race based. Instead, this
law is “harm based.” _

,

 

On April 23, 2023, the Washington state legislature passed the
Covenants Homeownership Act (CHA), pioneering legislation that will
provide compensation to victims of the racist restrictive covenants
that destroyed opportunities for generations of Black, Asian, Latinx,
and Indigenous families. Historians have been working in dozens of
locations to document the extent and impact of racial restrictive
covenants, finding them in thousands of neighborhoods and showing that
they have a close connection to today’s disparate rates of
homeownership and wealth.

Now the state of Washington is taking action to compensate the
victims, and doing so with a law designed to survive court challenges
that might scuttle reparations or programs that are overtly race
based.

INSTRUMENTS OF LAW

Racial restrictive covenants were legal instruments that developers or
owners recorded with county authorities to bar certain populations
from buying, renting, or occupying property in designated
neighborhoods. They were binding in perpetuity. Future owners could
face costly penalties if they rented or sold to the wrong party. Some
covenants said, “Whites only.” Others specified banned populations
which sometimes included Jews and Middle Easterners along with anyone
perceived to be Black, Asian, “Indian” or “Mexican.” In the
Seattle area, one subdivision developer specified “Aryans only.”

Covenants were widely implemented in the decades from 1910s through
1960s, promoted by the American Board of Realtors in cities and
suburbs across the country. Although they became void with the passage
of the 1968 Fair Housing Act, millions of covenants remain embedded in
property records and continue to shape housing inequality.

Redlining and restrictive covenants worked together to destroy
property rights for generations of BIPOC families. Redlining maps were
created by the Home Owners’ Loan Corporation (HOLC) in 1936 to show
banks and mortgage lenders where it was supposedly risky to make
housing loans. Covenanted neighborhoods received high ratings while
areas where nonwhites or other minorities lived were redlined as
“hazardous” to lenders.  The Federal Housing Authority (FHA) then
joined other lenders in refusing loans in redlined areas. From 1934
until 1962 less than two percent of FHA loans went to families of
color.

Restrictions in Blue Ridge neighborhood in Seattle, subdivided and
sold by William Boeing, founder of Boeing Aircraft

It is sometimes wrongly assumed that restrictive covenants became
illegal in 1948 with the _Shelley v. Kraemer_ decision in which the
Supreme Court declared that a racist covenant was a private contract
that lacked standing in a court of law because enforcement by a state
government would violate the equal protection clause of the 14th
Amendment.

But the ruling did not make covenants illegal and had little impact.
After 1948, race discrimination remained perfectly lawful and White
neighborhoods continued to enforce covenants by other means. Indeed,
segregation worsened over the next twenty years. For example, the
Washington Supreme Court issued rulings in 1960 and 1961 affirming the
legal  “right of segregation”
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Partial map of restricted subdivisions in Seattle and suburbs

Homeownership by race 1970-2020 in Seattle/King County showing
declining rate of Black and Latinx homeownership

Map of 35,000 restricted properties in King and Pierce counties
(Seattle-Tacoma)

LEGACIES

Racial restrictive covenants maintained much of their threat even
after they became void in 1968. Many neighborhoods that had been
restricted as a matter of law have kept that reputation decades and
now generations later. Biased “steering” by realtors,
discriminatory behavior by parties selling or renting properties,
stares and snubs by neighbors have continued to block open access
through the years.

Another legacy is perhaps more important. Today’s extreme
disparities in homeownership and family wealth have everything to do
with covenants. Property restrictions not only determined where people
could live, they limited access to any kind of home ownership for most
people of color. Squeezed into certain areas, potential buyers were
then hammered by redlining practices and denied access to mortgages.

Civil rights laws beginning with the Fair Housing Act of 1968 came too
late. Housing price escalation in recent decades has meant that
families with modest incomes who missed the golden age of mass
homeownership (1940-1970) when low-interest FHA and GI-bill loans
expanded homeownership for White families, have been locked out.
Today, nationwide, only 45% of Black families are homeowners while 73%
of White families own homes.   In Washington state, homeownership
rates for African Americans have declined in recent decades as prices
have soared. Currently only 31% of Black families own a home. In
Seattle/King County
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where prices have rocketed out of sight, only 27% of Black families
are homeowners.

LAW MAKING

The Covenants Homeownership Act is based on research begun almost 20
years ago at the University of Washington when Trevor Griffey and I
launched the online _Seattle Civil Rights & Labor History Project,_
hoping to combat public ignorance about those issues in our region.
Soon after, we began researching and publishing lists and maps of
restrictive covenants, first numbering in the hundreds, later in the
thousands.

In 2021, the  initiative, renamed  the Racial Restrictive Covenants
Project – Washington State
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boost when the legislature voted to authorize and fund a statewide
inventory of racist restrictions. More than 50,000 restricted parcels
have been identified so far, with many more still to be found. Similar
projects are underway in Minneapolis, St. Louis, Chicago, Washington
D.C., and many  other locations,
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historians and community organizations.

Research is one thing. More impressive is the coalition of community
groups and progressive law makers who wrote the new law and powered it
through the legislature. It was thrilling to watch the brilliant work
of that coalition in mobilizing support throughout the state. More
than 2,000 people signed up to testify as the bill moved through
hearings.

The Covenants Homeownership Account Act provides compensation in the
form of substantial mortgage assistance to victims and their
descendants. It was written with a view to overcoming legal challenges
that might derail programs that are overtly race based.

Instead, this law is “harm based.” It establishes that the
government caused financial harm by authorizing and enforcing racial
restrictive covenants: “The state government was both an active and
passive participant in this discrimination.” Then it establishes a
very substantial remedy  (roughly $100 million per year) to provide
interest-free mortgage loans to thousands of families excluded from
equal housing opportunities in the years prior to the 1968 Fair
Housing Act.

Applicants must be first-time homebuyers with incomes at or below the
area median. They must have been a Washington resident before 1968 or
a descendant of someone who was. The details remain to be worked out,
but because restrictive covenants usually specified “whites only,”
it is likely that all Black, Asian, Indigenous, and Latinx families
who meet the residency and other criteria will be eligible for a
no-interest free loan.

And the size and number of compensation awards will be substantial.
Funding will come from a $100 Covenant Homeownership recording fee
that will apply to all real estate transactions. The logic of this is
that owners selling properties have benefitted from the wealth
building opportunities that have been a biproduct of homeownership;
opportunities denied to most families of color.

This fee is going to raise a lot of money, enough, according to one
estimate, to enable 2,000 to 4,000 loans in the $25,000-50,000 range
each year.

These numbers may start to reverse the race disparities in
homeownership. Moreover, the legislation should become a model for
other states.

Labor historians rarely get to enjoy a moment like this, a moment when
you see historical research turn into something truly consequential,
into a policy that is going to change the lives of thousands, a policy
that takes history and justice seriously. Sweet.

Note: This is a revised version of “A new law addresses the harm
done by decades of racist housing practices
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_Washington Post_, May 10, 2023.

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* Covenants Homeownership Act; Washington State; Home ownership;
Restrictive covenants
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