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A Berkshire Hathaway-owned mortgage lender settled with the Department of Justice over claims it effectively instituted redlining in minority neighborhoods in three states.
Trident Mortgage Company agreed to pay over $20 million to help increase credit opportunities in neighborhoods of color, the DOJ announced Wednesday.
That makes the case the first-ever redlining settlement against a mortgage company and the second-largest such settlement in DOJ history.
“Last fall, I announced the Department’s Combatting Redlining Initiative and promised that we would mobilize resources to make fair access to credit a reality in underserved neighborhoods across our country,” U.S. Attorney General Merrick Garland said in a statement. “As demonstrated by today’s historic announcement, we are increasing our coordination with federal financial regulatory agencies and state Attorneys General to combat the modern-day redlining that has unlawfully plagued communities of color.”
The department said Trident engaged in redlining throughout the Philadelphia metro area, including in Philadelphia, Camden, New Jersey, and Wilmington, Delaware. It’s a practice where lenders discourage or avoid extending credit to people living in communities of color, according to the DOJ.
The complaint states: “From at least 2015 to 2019, Trident failed to provide mortgage lending services to neighborhoods of color in the Philadelphia metropolitan area, that its offices were concentrated in majority-white neighborhoods, and that its loan officers did not serve the credit needs of neighborhoods of color.”
“The complaint also alleges that loan officers and other employees sent and received work emails containing racial slurs and referring to communities of color as ‘ghetto,’” the statement continues.
Under the settlement, Trident will invest over $20 million to create home ownership opportunities in communities of color around Philadelphia. Over $18 million will go to loan subsidies for the area’s residents and $750,000 will go to services that help residents access mortgages. The agreement will also help pay for advertising and consumer finance education. It will also pay a civil penalty of $4 million.
Trident no longer operates as a mortgage lender and will contract with other lenders to meet the needs of the neighborhoods that faced the discrimination.
“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,” Assistant Attorney General Kristen Clarke, of the Justice Department’s Civil Rights Division, said in a statement.