Berkshire Hathaway subsidiary to pay over $20M to settle redlining lawsuit News
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Berkshire Hathaway subsidiary to pay over $20M to settle redlining lawsuit

The US Department of Justice (DOJ) announced Wednesday that Trident Mortgage Company agreed to pay over $22 million to settle federal charges that its lending practices intentionally discriminated against minorities in the Greater Philadelphia Area. Trident is one of the largest realtor-affiliated mortgage lenders in the US and is a subsidiary of Warren Buffett’s Berkshire Hathaway. This settlement comes months after the DOJ launched an initiative to combat discriminatory redlining practices by lenders.

The US Justice Department and the Consumer Financial Protection Bureau sued Trident for illegal, discriminatory lending practices in July 2022. The complaint asserted that Trident’s office locations were concentrated in majority-white neighborhoods, that Trident’s loan officers served majority-white communities but not majority-minority neighborhoods, and that Trident had a disproportionately low number of home loans in majority-minority communities. Additionally, the complaint alleged that Trident’s lending staff exchanged racist emails and photos.

The complaint claimed that Trident’s practices violated the Fair Housing Act (FHA), the Equal Credit Opportunity Act (ECOA), and the Consumer Financial Protection Act. The FHA and ECOA prohibit creditors from discriminating in home loans based on race, color, or national origin. The Consumer Financial Protection Act created the Consumer Financial Protection Bureau and gives it broad authority to protect consumers from unfair, deceptive, or abusive acts and practices from depository institutions.

According to the proposed consent order, Trident must pay $18.4 million to fund a loan subsidy program to increase credit extended to majority-minority Philadelphia neighborhoods. The order also includes a nondiscrimination injunction. In addition, it requires Trident to get independent third-party credit needs-assessment consultants with specialized experience in nondiscriminatory access to credit to assess the needs of majority-minority areas of Philadelphia and report on these findings.

Based on the order, Trident must also spend $875,000 on target advertising and an outreach campaign. Moreover, Trident has to pay $375,000 to fund a consumer financial education program.

In response to the settlement announcement, Pennsylvania Attorney General Josh Shapiro stated:

Having an equal chance to buy a home is vital. Companies that use their power to discriminate and rob individuals of opportunity based on the racial makeup of their neighborhoods is not only unacceptable, it is illegal. Through our investigation, we allege that hard working Pennsylvanians were denied the chance at the American dream simply because of where they live, which unfortunately in America is inextricably tied to who they are.

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