Deal provides over $20 million to increase lending opportunities in neighborhoods of color
First Red Line vs. Mortgage Company Contract; Second Largest Red Contract in Justice Department History
The Department of Justice, Consumer Financial Protection Bureau (CFPB), Attorneys General of Pennsylvania, New Jersey and Delaware announced today that Berkshire-owned Trident Mortgage Company (Trident) Hathaway Inc. The practice of “redlining” credit discrimination in the greater Philadelphia area, including neighborhoods. The resolution is the first redline settlement the Department of Justice has agreed with a non-bank lender and is his second largest redline settlement in the Department’s history.
“Last fall, I announced the State Department’s Fighting Red Lines initiative, promising to mobilize resources to achieve equitable access to credit in underserved areas across the country.” As our historic announcement shows, we are strengthening our partnerships with federal financial regulators and state attorneys general to combat the modern red line that has illegally plagued communities of color.”
“This deal is a stark reminder that redlining is not a matter of a bygone era. Trident’s illegal redlining activities rob communities of color of equal access to mortgages, “It robbed us of opportunities to build wealth and devalued neighborhood real estate,” the assistant attorney general said. Racial communities are guaranteed to be injected with significant credit resources Working with federal and state law enforcement partners to ensure lenders are held accountable if they violate fair lending laws We are sending a strong message.”
“Trident illegally demarcated areas in the Philadelphia area to exclude eligible families from seeking home ownership,” said CFPB director Rohit Chopra. “With housing costs so high, it is imperative that unlawful discrimination does not make homeownership any more unaffordable.”
“For too long, black, Latino, and other communities of color in Philadelphia have had equal access to legal title to loans and deeds,” said Jacqueline Romero, U.S. Attorney for the Eastern District of Pennsylvania. “These historically flagged neighborhoods of Philadelphia continue to experience disproportionate levels of poverty, poor health, poor education, unemployment, and violent crime. We are pleased that the Office of the Attorney General is supporting the Attorney General’s Redline Initiative through this resolution, and we look forward to our continued partnership with the Office of Civil Rights.»
Redlining is an illegal practice whereby lenders avoid providing credit services to people living in communities of color. This is done because of the race, color, or national origin of the residents of that community. The lawsuit filed today in federal court alleges that from 2015 through at least 2019, Trident failed to serve neighborhoods of color in the greater Philadelphia metropolitan area, and that its offices served primarily white neighborhoods. It claims to have been focused and that the loan officer was always on service. Credit needs in shaded regions. The complaint also alleges that loan officers and other employees sent and received work-related emails that contained racial slurs and referred to communities of color as “ghettos.”
Under a proposed consent order, which requires court approval and is filed concurrently with the lawsuit today in the United States District Court for the Eastern District of Pennsylvania, Trident will invest $20 million to increase credit opportunities in communities of color. We agreed to spend more. Located in the Greater Philadelphia Area. Trident plans to make at least the following investments: $18.4 million in loan grant funds for residents of color in the Philadelphia area. $750,000 to develop community associations that provide services that improve access to mortgage financing. $875,000 in advertising and awareness. $375,000 for consumer financial education. Since Trident is no longer in the lending business, it contracts with another lender to provide grants and lending services to the Red Flag community. Trident ensures that the lender will employ at least four of her dedicated mortgage officers to serve the communities of color around Philadelphia, Camden and Wilmington. We maintain at least four offices in these regions. We also employ a full-time Community Lending Officer to oversee the continued development of lending to communities of color in the Greater Philadelphia area. Trident will also pay $4 million in civil penalties.
Trident also has deals in Pennsylvania, New Jersey and Delaware. These agreements resolve claims against Trident and his Fox & Roach LP, Trident’s real estate subsidiary. In addition to the terms of the agreement contained in the Federal Consent Order, and under its contract with the States of Pennsylvania and New Jersey, Trident will reimburse the states for the costs of conducting the investigation. Fox & Roach will also invest her $150,000 in marketing to communities of color in the Philadelphia area.
The Department of Justice and the CFPB jointly investigated this case with the assistance of the US Attorney’s Office for the Eastern District of Pennsylvania. The investigation was conducted in close coordination with the Attorneys General of Pennsylvania, New Jersey and Delaware.
The regulation is part of the Department of Justice’s Combat Red Lines initiative, a coordinated enforcement effort to combat this persistent form of discrimination against communities of color. This initiative expands the reach of the division by strengthening partnerships with U.S. attorneys’ offices, regulatory partners, and state attorney general’s office partners across the country. Additional information about Fair Housing Section loans is available at www.justice.gov/fairhousing. People can report loan discrimination by calling the Justice Department’s Housing Discrimination Hotline at 1-833-591-0291 or by filing a report online.