DOJ: Buffett’s company discriminated against black homebuyers

New York — WASHINGTON (Reuters) – A Pennsylvania mortgage company owned by billionaire Warren Buffett has discriminated against potential black and Latino home buyers in Philadelphia, New Jersey and Delaware, the Justice Department said on Wednesday, in what is being called the second largest redline settlement in history.

The Trident Mortgage Company, a division of Berkshire Hathaway’s American Home Services, deliberately avoided writing mortgages in minority-majority neighborhoods in West Philadelphia such as Malcolm X Park; Camden, NJ; And in Wilmington, Delaware, the Department of Justice and the Consumer Financial Protection Bureau said in a settlement with Trident.

As part of the agreement with the government, Trident will have to allocate $20 million to provide loans in disadvantaged neighborhoods.

“Illegal Trident housing replanning activity has denied communities of equal color access to residential mortgages, deprived them of the opportunity to build wealth, and reduced the property value in their neighborhoods,” said Kristen Clark, assistant attorney general for the Department of Justice’s Civil Rights Division. prepared statement.

Senator Vincent Hughes, a Philadelphia Democrat, grew up a few blocks from West Philadelphia Park where a press conference was held Wednesday about the settlement. Hughes said parts of his life have been framed by discriminatory lending practices that prevent black and brown communities from creating wealth.

Hughes’ father worked for one of the oldest savings and loans owned by blacks, a company called Berean that would finance mortgages to black families when they were rejected by banks and other lenders.

“People have come up to me and said, ‘Vince, your dad gave me a mortgage on my first home when I was rejected everywhere else. “If it wasn’t for Beren and your father,” Hughes said, “I wouldn’t have been able to buy my house.” “We witnessed this distinction in real time.”

Redlining is a term used to describe when banks deliberately avoid making loans to non-white communities. Banks and the US government used to draw on maps in red those neighborhoods deemed undesirable for home loans. Neighborhoods have almost always been areas where ethnic minorities live, and even include other historically discriminated communities such as ghettos.

This practice effectively isolates entire communities from the primary pathway of wealth creation in the United States: home ownership. To this day, black and Latino families are less likely to own their own homes than their white counterparts.

Alleged re-planning activity occurred between 2015 and 2019 – Trident stopped writing mortgages in 2020. Besides avoiding making mortgages in minority neighborhoods, Trident employees made racist comments about offering loans to black homebuyers, calling certain neighborhoods “neighborhoods.” Judaism”. One of the Trident managers is photographed standing in front of the Confederate flag. The marketing materials used by Trident included exclusively white individuals, and nearly all of the company’s employees were white.

Josh Shapiro, the Pennsylvania attorney general running for governor, described Trident’s behavior as “systemic racism, pure and simple.”

Philadelphia has a long history of racism towards black home buyers. The Philadelphia City Council released a report Wednesday that found that 95% of all home appraisers in the city were white and there remains a racial gap between how homes owned by black homeowners are valued versus homes owned by white owners.

Hughes said he and other lawmakers were outraged about the disclosure of redlining by Trident and others in the 2018 investigation by Revell into Buffett’s mortgage companies. They lobbied Shapiro during an allotment 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 affected neighborhoods as well as pay a $4 million fine. The Justice Department said that since Trident no longer operates a lending business, it will be contracted to a separate firm to provide $20 million to back the loans.

The Trident settlement also includes the first redlining case against a non-bank mortgage lender. Since the Great Recession, nearly half of all mortgages in the country have been guaranteed by companies that sell the mortgage on the spot to investors. These non-bank lenders include companies like Quicken Loans, Rocket Mortgage, and Loan Depot, among many others.

“Credit discrimination is illegal regardless of 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 findings of the Department of Justice and the CFPB in the settlement, noting that Trident did not have to admit wrongdoing as part of the case. Buffett himself did not immediately respond to a request for comment, but he has historically deferred any comment to Berkshire’s subsidiaries.

Hughes said he had no personal experience with Trident, but said he was not surprised to learn of the company’s statement after it was announced that the settlement denied any wrongdoing.

“That’s what these companies do, right? None of them admitted it, they just ended up paying the money.”


Claudia Lauer, an Associated Press reporter, contributed to this report from Philadelphia. Writer Josh Funk contributed to AP Business from Omaha, Nebraska.

Leave a Reply

%d bloggers like this: