A former mortgage lender with ties to Warren Buffett has been hit with the second-largest settlement for a redlining case in Justice Department history.
The Department of Justice, in conjunction with the Consumer Financial Protection Bureau and the attorneys general of three states, announced Wednesday Trident Mortgage Company has agreed to pay a $20 million settlement. The lender, owned by Berkshire Hathaway, was accused of redlining practices in the Philadelphia metro area, including Camden, New Jersey and Wilmington, Delaware.
Redlining is an illegal practice that occurs when lenders avoid providing credit to people in communities of color. The Justice Department has been taking a targeted approach to eliminating the discriminatory practice through its Combatting Redlining Initiative.
According to the DOJ, Trident failed to provide mortgage lending services in communities of color from 2015 to 2019. The company’s offices were concentrated in majority white neighborhoods and loan officers were accused of not serving communities of color.
The complaint against Trident also accused loan officers and employees of work emails with racial slurs while referring to communities of color as being “ghetto.”
Read more
Residential
National
Flood costs are highest in formerly redlined areas
As part of the settlement, subject to court approval, Trident will pay more than $20 million to increase credit opportunities in the same neighborhoods it allegedly discriminated against. Trident will also need to pay $4 million in a civil penalty.
Trident has ceased lending services, so it will need to contract another lender to provide services for the affected communities. At least four mortgage loan officers will be deployed to the communities and at least four offices will be based there as well. Additionally, a full-time manager of community lending will oversee activities.
“This settlement is a stark reminder that redlining is not a problem from a bygone era,” assistant AG Kristen Clare said in a prepared statement. “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.”
Attempts to reach Trident for comment were unsuccessful.