NEW YORK (AP) — The Justice Department said Wednesday that a Pennsylvania mortgage company owned by billionaire Warren Buffett discriminated against potential black and Hispanic homebuyers in Philadelphia, New Jersey and Delaware in what is being called the second- the size of the retiring settlements. in history.
Trident Mortgage Co., a unit of Berkshire Hathaway’s HomeServices of America, deliberately avoided writing mortgages in majority-minority neighborhoods in West Philadelphia, such as Malcolm X Park; Camden, New Jersey; and in Wilmington, Delaware, the Department of Justice and the Consumer Financial Protection Bureau said in their agreement with Trident.
As part of the agreement with the government, Trident will be required to commit $20 million to provide loans in underserved areas.
“Trident’s illegal redlining activities have deprived communities of color of equal access to home mortgages, deprived them of their opportunity to become wealthy, and devalued property in their neighborhoods,” said Kristen Clark, Assistant Attorney General for the Civil Rights Division of the Department of Justice. prepared statement.
Sen. Vincent Hughes, D-Philadelphia, grew up just blocks from the West Philadelphia park where Wednesday’s news conference on the settlement was held. Hughes said part of his life has been shaped by discriminatory lending practices that prevent black and brown communities from building wealth.
Hughes’ father worked at one of the oldest black-owned savings and loans, called Berean, which funded mortgages for black families when other banks and lenders turned them away.
“People would come up to me and say, ‘Vince, your father gave me a mortgage on my first house when I got turned down everywhere else.’ “If it wasn’t for Berin and your father, I wouldn’t have been able to buy my house,” Hughes said. “We witnessed this discrimination in real time.”
Redlining is a term used to describe when banks deliberately avoid lending to non-white communities. Banks and the US government drew on maps with a red marker those areas that were considered undesirable for housing loans. The neighborhoods were almost always areas where racial minorities lived, and even included other historically discriminated communities, such as Jewish neighborhoods.
This practice has effectively cut off entire communities from the main avenue of wealth creation in the US: home ownership. To this day, blacks and Hispanics are significantly less likely to own a home than whites.
The supposed red line occurred between 2015 and 2019 — Trident stopped writing mortgages in 2020. Along with avoiding mortgages in minority neighborhoods, Trident employees made racist comments about lending to black homebuyers, calling certain areas “ghettos.” One Trident manager was photographed posing in front of the Confederate flag. The marketing materials used by Trident featured exclusively white people, and almost all of the company’s staff was white.
Josh Shapiro, Pennsylvania’s attorney general, who is running for governor, called Trident’s behavior “systematic racism, pure and simple.”
Hughes said he and other lawmakers were outraged by the exposure of the red line by Trident and others in 2018 Reveal Investigation to Buffett’s mortgage companies. They pressed Shapiro during the appropriations hearing, and the attorney general responded by setting up a hotline to collect personal stories.
As part of the settlement, Trident agreed to hire mortgage loan officers in the affected areas and pay a $4 million fine. Since Trident is no longer in the lending business, a separate company will be contracted to provide $20 million in loan subsidies, the Justice Department said.
The largest exclusion case involved Wisconsin-based Associated Bank, which was accused of discriminatory practices between 2008 and 2011. In 2015, the bank settled with regulators for $200 million.
The Trident settlement also includes the first case against a non-bank mortgage lender. Since the Great Recession, roughly half of all mortgages in the country are underwritten by companies that immediately sell mortgages to investors. These non-bank lenders include firms such as Quicken Loans, Rocket Mortgage and Loan Depot, among many others.
“Credit discrimination is illegal, whether the offending company is a traditional bank or a non-bank lender,” said Rohit Chopra, director of the Consumer Financial Protection Bureau.
In a statement, HomeServices of America said it “strongly disagrees” with the DOJ and CFPB’s settlement findings, noting that Trident should not have admitted wrongdoing as part of the case. Buffett himself did not immediately respond to a request for comment, but has historically deferred any comment to Berkshire’s subsidiaries.
Hughes said he had no personal experience with Trident, but he said he wasn’t surprised to learn that after the deal was announced, the company’s statement denied infringement.
“That’s what these companies do, right? None of them admit it, they just pay money,” he said.
AP reporter Claudia Lauer contributed to this report from Philadelphia. AP Business Writer Josh Funk wrote from Omaha, Nebraska.
https://www.gettysburgtimes.com/news/business/article_dcd26bf2-0503-59ba-94a2-1fbd3eb97e03.html
