A recent lawsuit alleges the Oklahoma Housing Finance Agency (OHFA) engaged in illegal racial discrimination when administering a federal COVID mortgage-relief program, providing special benefits and access to members of certain racial groups but not others.

The complaint noted that other states—even left-wing California—used race-neutral criteria to administer their programs.

In 2021, the U.S. Congress passed the American Rescue Plan Act, which established the Homeowner Assistance Fund (HAF) to help homeowners in the wake of the COVID-19 pandemic.

OHFA received $87,056,967 in federal HAF funds to distribute to Oklahoma homeowners unable to make mortgage payments due to COVID’s economic disruption. Under the Oklahoma Homeowner Assistance Fund program, homeowners were eligible for up to $35,000 in relief.

Now, through Elaine Wilkinson v. Oklahoma Housing Finance Agency, nine plaintiffs allege that OHFA employed racial discrimination in the administration of that program. The plaintiffs want their suit transformed into a class-action effort that represents all Oklahomans potentially denied either mortgage relief or even basic awareness of the relief program due to OHFA’s alleged wrongdoing.

“OHFA systematically discriminated against white, Asian, and Pacific Islander homeowners when providing COVID-19 relief,” the plaintiffs stated in a complaint filed Feb. 17. “As part of its Oklahoma Homeowner Assistance Fund program, OHFA prioritized ‘socially disadvantaged individuals’ in everything from the development and marketing of its program to approving applications. OHFA impermissibly identified ‘socially disadvantaged individuals’ based on their race.”

The complaint noted that the front page of the OHFA’s Oklahoma Homeowner Assistance Fund program website stated that a homeowner is a socially disadvantaged individual if the homeowner is a “[m]ember of a group that has been subjected to racial or ethnic prejudice or cultural bias within American Society: African American, Hispanic/Latino, Native American, LGBTQ+.”

As a result, the complaint noted white, Asian, and Pacific Islander homeowners were therefore considered not to be socially disadvantaged, even though those categories include many different ethnicities and nationalities such as homeowners of Caucasian, Jewish, Middle Eastern, North African, Korean, Pakistani, Native Hawaiian, and Samoan descent.

Furthermore, the complaint stated that homeowners considered “socially disadvantaged” based on their racial heritage were allowed to seek homeowner assistance while having substantially higher incomes than individuals in any racial category considered not to be socially disadvantaged.

“Because of this race-based classification, a white, Asian, or Pacific Islander homeowner with household size of 3 in Oklahoma County, Oklahoma, could not apply for relief in 2023 if the homeowner’s income was greater than $96,200 … but a black, Latino, or Native American homeowner with the same household size could apply with an income of up to $116,110 …” the complaint stated.

The complaint also alleged that marketing materials were disproportionately directed to individuals whose racial identity was considered “socially disadvantaged,” and individuals from those racial groups were also given priority even when they had the same income as individuals from other racial groups.

“There is no justification for OHFA’s racial discrimination,” the complaint stated. “OHFA could have administered its program in a race-neutral way. Instead, it discriminated against white, Asian, and Pacific Islander homeowners in favor of homeowners from its preferred racial groups. But COVID-19 did not discriminate. Oklahoma homeowners of all races needed assistance.”

The federal law creating the COVID relief program for homeowners did not require states to define a “socially disadvantaged” group based on race, the complaint noted, although guidance documents issued by the Biden administration recommended that race be a major factor.

However, the complaint noted that the Biden administration’s guidance “is not mandatory or binding on the States,” and stated that the OHFA’s “race-based definition of socially disadvantaged individual was more narrow and racially specific than the definition suggested in non-binding Treasury guidance.”

Furthermore, the complaint argued that other states did not follow Oklahoma’s lead in administering their COVID mortgage-relief programs. Both Texas and California “used race-neutral criteria to determine which homeowners are socially disadvantaged,” the plaintiffs stated.

Did OHFA Use Race-Based Criteria?

Data indicate that beneficiaries of the mortgage-relief program were disproportionately from certain racial groups, even after accounting for poverty rates.

About 17.9 percent of Oklahoma citizens with income below the poverty line are black but 26 percent of homeowners who received relief through the COVID program were from that racial group.

Plaintiff Elaine Wilkinson, who is white and owns a home in Cleveland County, is an artist and has an online e-commerce business. Because COVID resulted in the temporary closure of the international vendor that assists with printing and mailing Wilkinson’s personalized and handcrafted items to customers, she was unable to fulfill orders and experienced a significant decrease in income, falling behind on her mortgage payments.

The plaintiffs’ complaint argued Wilkinson was eligible for financial assistance through OHFA’s Oklahoma Homeowner Assistance Fund program because she met its income limits and other requirements, but stated that her application was denied.

The complaint argued that denial “was due to OHFA’s race-based criteria, including its prioritization of applications and distribution of funds.”

Plaintiffs Cameron and Monica Young, who are also white, experienced much the same thing.

Cameron Young is a disabled veteran, while Monica Young worked as a massage therapist for a chiropractor’s office. But Monica lost her job when COVID resulted in an initial shutdown of the office, and then permanently lost her job when the chiropractor’s office ended its massage therapy program due to difficulties from the pandemic.

The couple qualified for OHFA’s Oklahoma Homeowner Assistance Fund program but were denied assistance, the complaint stated.

Andrea Spears, who is white and owns a home in Tulsa County, tells a similar tale.

Before the COVID-19 pandemic, Spears operated a pet-sitting business. Because of COVID, she lost clients and business dried up since clients did not want people in their homes and were not traveling because of the pandemic. Spears experienced a significant decrease in income and applied for assistance from the Oklahoma Homeowner Assistance Fund program. She was denied.

OHFA Seeks to Have Case Dismissed

On March 14, the OHFA filed a motion to dismiss, arguing that “no plaintiff states a plausible claim that they personally have been subjected to racial discrimination.”

OHFA claimed Wilkinson did not complete the application, and declared the Youngs were denied because they had received a payment deferral, meaning they were technically no longer considered delinquent on their mortgage. OHFA said Spears was denied because she was not delinquent by 30 days at the time her application was submitted.

Several of the nine plaintiffs argued they never heard about the OHFA program because the agency’s marketing targeted individuals of other races, and therefore they never knew to apply.

OHFA argued that three plaintiffs’ cases should be dismissed because “they did not apply for benefits” under the program, dismissing the idea that the lack of application was a result of the plaintiffs not being informed of the program’s existence.

The OHFA’s motion argued that plaintiffs “who purportedly didn’t hear” of the program “lack standing because they did not apply for benefits” under the program.

OHFA claimed its marketing included distribution of information through several organizations “that serve all races.”

And the OHFA’s motion also argued the agency is not “an agency of the state,” but instead exists as a “legal entity separate and distinct” from state government.

In an April 4 response to OHFA’s motion to dismiss, the plaintiffs responded to many of the arguments put forth by OHFA.

For example, the plaintiffs said that those who were allowed to defer payments were still considered eligible for the Homeowner Assistance Fund benefits, and argued other factual disputes regarding whether a plaintiff completed an application should be addressed through the discovery process.

Most notably, the plaintiffs said that OHFA did not deny the key allegation contained in their lawsuit: that the agency engaged in racial discrimination in the administration of the COVID mortgage-relief program.

“OHFA denies none of this. In fact, it freely concedes that it defined ‘socially disadvantaged’ in racial terms and then discriminated on that basis,” the plaintiffs’ response stated. “But, instead of admitting liability and making Plaintiffs whole, the agency advances the tortured argument that although it intentionally discriminated against white, Jewish, Asian, and Pacific Islander Oklahomans across the entire State, it did not discriminate against the specific Oklahomans of disfavored races who brought suit in this case.”

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