Log In

Reset Password
  • MENU
    Tuesday, August 09, 2022

    Berkshire Hathaway-owned lender settles redlining case for $24 million

    A Philadelphia mortgage lender owned by Berkshire Hathaway has agreed to pay $24 million to resolve lending discrimination claims in three states, the Department of Justice announced Wednesday, in what prosecutors have called the second-largest "redlining" settlement in the agency's history.

    Trident Mortgage Co. failed to provide mortgage lending services to neighborhoods of color in the Philadelphia metro area, which includes neighborhoods in Camden, N.J., and Wilmington, Del., from at least 2015 to 2019, federal officials said. The company engaged in a host of discriminatory practices, such as concentrating offices in majority-White neighborhoods and excluding qualified families from receiving credit. The complaint alleged that loan officers and other employees sent and received work emails containing racial slurs and demeaning references to communities of color, the department said.

    "This settlement is a stark reminder that redlining is not a problem from a bygone era," said Assistant Attorney General Kristen Clarke of the department's civil rights division, in a statement Wednesday announcing the agreement. "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,"

    Berkshire Hathaway did not immediately respond to a request for comment.

    Redlining is an illegal practice used to deny equal access to home loans, often because of the racial characteristics of an applicant's neighborhood. In the 1930s, government surveyors graded neighborhoods in more than 200 cities, color-coding them green for "best," blue for "still desirable," yellow for "definitely declining" and red for "hazardous." The "redlined" areas were the ones local lenders discounted as credit risks, in large part because of the residents' racial and ethnic demographics. Though outlawed more than 50 years ago, studies show its consequences have been far-reaching, from depressing home values to spurring poverty and to exposing marginalized residents to higher levels of pollution.

    As part of the agreement to resolve the allegations, Trident will invest more than $20 million to increase credit opportunities in neighborhoods of color in the region, the department said. Because the company no longer operates a lending business, it will contract with another company to provide loan subsidies and services to the affected communities in and around Philadelphia, Camden and Wilmington. Trident also agreed to pay a $4 million civil penalty.

    U.S. Attorney General Merrick Garland created an initiative within the Justice Department last year to combat redlining, joining with other agencies to tackle new iterations of housing discrimination.

    The DOJ and the Consumer Financial Protection Bureau conducted a joint investigation of Trident's practices, with help from the U.S. attorney's office in the Eastern District of Pennsylvania, and in coordination with the attorneys general of Pennsylvania, New Jersey and Delaware.

    One of the largest public companies in the world, Berkshire Hathaway is led by investor Warren Buffett, whose acquisitions and investment strategies have long been studied by corporate executives and market observers. The Bloomberg Billionaire's Index puts his personal fortune north of $99 billion.

    Post your comment

    We encourage respectful comments but reserve the right to delete anything that does not contribute to an engaging dialogue. Help us moderate this thread by flagging comments that violate our guidelines. Read the commenting policy.