Is a rent-to-own housing program working? WA auditor looks for answers

A state-managed program two lawmakers say has failed to help hundreds of families become homeowners as promised is about to get more scrutiny.

State Auditor Pat McCarthy said Thursday she ordered a performance audit of the Washington State Housing Finance Commission’s oversight of a program that is designed to enable eligible low-income renters to own the residences in which they have lived in and rented for 15 years.

Known as Eventual Tenant Ownership, the program offers private developers federal Low-Income Housing Tax Credits in exchange for building units in which renters are to be offered ownership..

Democratic state Reps. Gerry Pollet of Seattle and Chris Stearns of Auburn wrote McCarthy last month to request the audit. They shared data showing hundreds of homes whose tenants had met the length-of-residency requirements but not been given the chance at ownership

They also contend the commission has failed to keep track of developments to make sure they are complying. While reviews are required for developments every five years, it is estimated at least 629 units have gone unregulated by the commission since 2010.

The audit will examine the effect of the program on homeownership rates and what the commission could do to improve outcomes for rent-to-own tenants.

“The Housing Finance Commission’s rent-to-own option is intended to increase home ownership, an important and timely issue in Washington state,” McCarthy said in a statement. “I believe a targeted review of the rent-to-own tax incentive will offer valuable insights to legislators and others.”

Work will begin early next year and should be finished before the end of 2024, according to McCarthy’s office. Existing funds will pay for the audit, though it will mean a reordering of projects within the agency, officials said.

Pollet said he appreciated the auditor “shifted priorities to try to ensure that the people who expected to have opportunities to own their homes are able to get their opportunity. If it weren’t for media coverage and the audit all of these people would remain screwed over forever.”

Attorney Gabe Galanda of Seattle has pressed state leaders for more than a year to examine the commission’s handling of the program. He said he represents several individuals who are entitled to deeds to their homes but are instead facing eviction from them.

“Until that audit occurs, nobody has yet to be told how many units have been promised to low-income people for eventual ownership,” he said. “This will help us establish this baseline and get everybody moving in a common direction towards fulfilling the promises made toward these tenant homebuyers.”

Reporter Grace Deng contributed to this report.