Trident Mortgage, a now-defunct lender owned by Berkshire Hathaway, has agreed to pay $24.4 million for engaging in redlining and discriminating against minorities in the greater Philadelphia metro area, federal and state regulators said Wednesday.
The Justice Department, Consumer Financial Protection Bureau and three state attorneys general announced at a news conference that Trident discouraged prospective minority applicants from applying for home loans in Philadelphia, Camden, New Jersey, and Wilmington, Delaware.
Trident was a major mortgage lender in Philadelphia, operating 53 loan offices in the metro area. But only two loan officers were based in minority neighborhoods, which represented roughly 50% of the population, officials said. The Justice Department and CFPB also said that Trident’s loan officers and other employees distributed and received work emails containing racial slurs and pejorative language.
The CFPB said Trident conducted 15 direct mail marketing campaigns from 2015 to 2018 in which all the people “appeared to be white,” and the company overwhelmingly sent house fliers and online ads of home listings to majority-white neighborhoods.
“This was systemic racism, pure and simple,” Pennsylvania Attorney General Josh Shapiro, who is running for governor, said at a news conference. Trident “denied mortgage access, lending and opportunities to build wealth,” he added.
Shapiro said the four-year investigation into Trident began when a state senator, Vincent Hughes, told regulators about the redlining claims.
“When people are denied home loans because of systemic racism, individual families are held back for generations,” he said.
Redlining was outlawed in the 1960s with the passage of the federal Fair Housing Act, but violations of that law persist.
“This settlement is a stark reminder that redlining is not a problem from a bygone era,” said Kristen Clarke, an assistant attorney general in the Justice Department’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.”
Trident went out of business in December 2020, Shapiro said, but company agreed to settle the allegations of discrimination by creating an $18.4 million mortgage loan subsidy program in minority neighborhoods that could support roughly 1,800 loans to qualified applicants.
Trident also will open four licensed mortgage offices in minority neighborhoods and pay roughly $2 million to fund ads in redlined areas and provide outreach, anti-bias training, consumer financial education and community development partnerships.
The company also agreed to pay a $4 million civil penalty to the CFPB for violations of the Equal Credit Opportunity Act and the Consumer Financial Protection Act. The Justice Department also alleged a violation of the Fair Housing Act.
CFPB Director Rohit Chopra called the company “a very, very bad actor,” and encouraged states to pass laws requiring nonbank lenders like Trident to be subject to the Community Reinvestment Act.
“It’s not banks actually that originate most of the mortgages anymore, it’s these mortgage companies, the nonbank lenders and we have to make sure they too are following the law,” Chopra said at the news conference. “We have to think about what are we going to do to make sure we root out credit discrimination, whether it’s a traditional bank or a nonbank like Trident.”
Nonbank mortgage lenders originated 77% of home loans in the U.S. last year.
Trident is a nonbank subsidiary of Fox & Roach, a real estate affiliate owned by Home Services of America. The ultimate holding company is Berkshire Hathaway, officials said. Fox & Roach will also invest $150,000 in marketing to communities of color in Philadelphia.
The enforcement action against Trident was filed Wednesday in the U.S. District Court for the Eastern District of Pennsylvania. Trident agreed to reimburse the states for the costs of the investigations.
