A mortgage lender owned by the billionaire Warren Buffett’s holding company, Berkshire Hathaway, engaged in lending discrimination against homebuyers of color, or redlining, in communities around Philadelphia, the US Department of Justice announced on Wednesday.
An agreement with Trident Mortgage Company resulted in the second-largest settlement over redlining in DoJ history.
Attorneys with the DoJ, the US attorney in the eastern district of Pennsylvania and the Consumer Financial Protection Bureau (CFPB) said in a complaint that between 2015 and 2019, Trident violated federal civil rights law by “avoiding providing home loans and other mortgage services to majority-minority neighborhoods” in the region surrounding Philadelphia, which covers 11 counties in four states, including the cities of Camden, New Jersey, and Wilmington, Delaware.
Of the 53 offices rented by Trident, 51 were located in majority-white neighborhoods and the vast majority of its loan officers were white, according to the complaint.
Trident data reported to federal regulators showed that home mortgage applications disproportionately came from majority white neighborhoods.
The DoJ, which conducted the investigation with the CFPB as part of its Combatting Redlining Initiative, also found that rival lenders managed to distribute nearly twice as many home loans to communities of color than Trident did.
Emails sent by Trident loan officers between 2016 and 2018 included racist slurs and content, including several instances in which loan officers referred to certain streets and neighborhoods as the “ghetto”.
As a result, the company failed to market and contact prospective homebuyers of color, discouraged applications from prospective homebuyers of color and restricted such homebuyers’ access to credit.
The complaint alleged that Trident received reports of potential fair housing infractions as far back as September 2015, yet “took no meaningful action” to address them.
“Trident illegally redlined neighborhoods in the Philadelphia area, excluding qualified families seeking to own a home,” said the CFPB director, Rohit Chopra.
In a settlement subject to court approval, Trident, which no longer operates as a mortgage lender, agreed to pay at least $20m toward improving credit access in communities of color, most of which will go toward investing in a loan subsidy fund for homebuyers of color. The company also agreed to pay a $4m civil penalty.
It is the first time the DoJ has settled a redlining case with a mortgage lender that was not a bank. Last August, the agency settled discrimination claims with Atlanta-based Candance Bank for its lending practices in Black and Latino neighborhoods around Houston, Texas.
“This settlement is a stark reminder that redlining is not a problem from a bygone era,” said Kristen Clarke, assistant attorney general of the DoJ’s civil rights division.
“Trident’s unlawful redlining activity denied communities of color equal access to residential mortgages, stripped them of the opportunity to build wealth, and devalued properties in their neighborhoods.”
