$10 Billion COVID-Era Housing Fund Faces Lawsuits as Up to 85% of Aid Went to Black Recipients in Some States

A significant COVID-era federal program, the Homeowner Assistance Fund (HAF), which distributed approximately $10 billion to assist homeowners, is now at the center of multiple discrimination lawsuits. The program explicitly considered race in determining eligibility, leading to a substantial portion of funds, reportedly up to 85% in some states, being allocated to Black Americans. White residents in Georgia, Missouri, and Oklahoma have filed lawsuits alleging illegal discrimination.

The Homeowner Assistance Fund, established under the American Rescue Plan, aimed to help homeowners struggling with mortgage payments and other housing costs during the pandemic. While states were required to allocate at least 60% of funds to homeowners below the median income, the remaining portion was prioritized for "socially disadvantaged individuals." The Biden administration provided a recommended definition, stating, "Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias," with a rebuttable presumption for Black Americans, Hispanic Americans, Native Americans, Asian Americans, and Pacific Islanders.

In Georgia, for instance, 82% of the funds, which could provide up to $50,000 per recipient, went to Black individuals, while only 13% went to white applicants. Lawsuits in the state contend that this disparity cannot be solely attributed to income differences, highlighting that approximately 45.6% of Georgia's population below the poverty line is white. The lawsuit against Georgia's Department of Community Affairs alleges that the state's plan included targeted outreach to counties with high minority populations and approved non-white applicants at a higher rate.

Missouri's program, administered by the Missouri Housing Development Commission, saw 44% of its funds go to Black residents, who constitute less than 12% of the state's population. In Oklahoma, the Housing Finance Agency explicitly stated on its website that "African American, Hispanic/Latino, Native American, [and] LGBTQ+" individuals were considered socially disadvantaged. Plaintiffs in Oklahoma include a white massage therapist and her disabled-veteran husband, who claim they were discriminated against due to these race-based classifications.

States like Georgia, Missouri, and Oklahoma adopted the federal administration's suggested racial criteria, unlike other states that used race-neutral definitions such as living in persistent poverty counties. Attorneys General in these states have largely defended their actions, arguing they were administering a federal program in accordance with Treasury guidelines. Georgia Attorney General Christopher M. Carr stated that the state's use of race was "entirely consistent with the Treasury’s definitions," and that white applicants could identify as socially disadvantaged.

The legal challenges underscore a broader debate regarding race-conscious policies and the 14th Amendment's equal protection guarantees. Similar lawsuits have arisen from other COVID-era relief efforts, such as the Oregon Cares Fund and the Restaurant Revitalization Fund, which also faced legal scrutiny for prioritizing specific racial or gender groups. These cases continue to test the boundaries of affirmative action and targeted assistance in federal programs.