Programs with a Purpose: The Power of Special Purpose Credit

Patience and Shanti described their roles in passing the Covenant Homeownership Act in Washington state, a groundbreaking piece of legislation that established a statewide SPCP. The Housing Development Consortium helped lead the coalition effort to pass the bill, while NFHA provided critical research support and helped document the history of racially restrictive covenants and other discriminatory housing practices that furthered the racial homeownership gap in Washington.

Ken discussed FHLB Boston’s special purpose credit program, Lift Up Homeownership. While SPCPs can be either people-based, targeting individual borrowers from underserved communities, or place-based, targeting geographic areas, both panelists emphasized that they were intentional in designing people-based programs since they specifically target the individuals harmed by structural racism and have the greatest impact on addressing the racial wealth gap.

The second panel focused on the legal and regulatory hurdles institutions face when establishing and administering SPCPs. Moderated by Brook Ames, with panelists Steve Antonakes, Executive Vice President of Enterprise Risk Management at Eastern Bank, and Zachary Best, Counsel at Relman Colfax, the group discussed how an institution establishes a program and the different standards for various types of organizations. Perhaps unsurprisingly, government-operated programs face the highest standards and must prove that the government was responsible for conducting the harm being addressed and that the proposed solution is narrowly tailored to address said harm. While nonprofit and for-profit organizations are not subject to the same regulations, all institutions must write a plan outlining the demonstrated need for a program as well as the proposed design and implementation. This paperwork and data collection is time-consuming and can be one of the biggest hurdles to establishing an SPCP, Steve said, alongside achieving internal consensus on how the program is structured.