By Hassan Kanu
U.S. President Joe Biden talks to reporters while boarding Air Force One,.
REUTERS/Kevin Lamarque
(Reuters) - The U.S. government obtained a groundbreaking settlement last month in its lawsuit alleging that a large mortgage company deliberately and systematically avoided providing home loans to Black and Hispanic families in Pennsylvania, New Jersey and Delaware.
The July 27 settlement is the federal government’s first enforcement action against redlining by a nonbank lender and it’s a signal that certain agencies, and even state officials, will scrutinize those entities’ practices a lot closer going forward.
Under the deal, Trident Mortgage Co LP will pay $24.4 million to resolve the lawsuit, which alleged that the company prevented minority families from building wealth through home ownership, and artificially depressed the property values of those who do own their homes. The enforcement action was a joint effort by the Consumer Financial Protection Bureau, Department of Justice and the attorneys general of Delaware, New Jersey and Pennsylvania.
The settlement includes $18.4 million to subsidize loans to minority borrowers in Philadelphia and the surrounding metropolitan area. Trident is also required to establish at least four branch locations within majority-minority neighborhoods in the region, and to pay a $4 million civil fine.
The lawsuit has broader significance because mortgage companies have replaced banks as the dominant players in the U.S. mortgage market. The proportion of mortgages originated by nonbank lenders has been rising steadily since 2013, reaching 77% of all reported mortgages in May 2022, according to the Urban Institute’s Housing Finance Policy Center.
And, it’s worth noting that Trident is owned by Berkshire Hathaway Inc, the sixth-largest business conglomerate in the U.S. by market value, Reuters reported in March. (Billionaire Warren Buffet, who runs Berkshire Hathaway, wasn’t accused of any wrongdoing, according to the Reuters report.)
A spokesperson for Trident’s parent, HomeServices of America, said in an emailed statement that the company has “never denied or discouraged access to mortgage loans or other services based on race,” and touted the terms of the settlement agreement as a commitment to closing the racial gap in homeownership.
A Berkshire Hathaway representative didn't respond to a request for comment.
A Justice Department spokesperson told me the agency opened an investigation after receiving a referral from the CFPB. “We have multiple redlining investigation open at this time in cities around the nation,” the spokesperson said.
The lawsuit and settlement demonstrate the Biden administration’s commitment to combating discriminatory lending, and to extending a program to address modern-day redlining that started under former president Barack Obama. Federal authorities have historically been reluctant to take an aggressive approach in enforcing housing discrimination laws, and President Donald Trump took steps to roll back an Obama administration fair housing mandate in 2020.
The agreement doesn’t require Trident to admit to the allegations in the government’s complaint. But, of course, it’s worth considering the factual allegations that three states and two federal agencies asserted in a public lawsuit after investigating Trident, and which the company paid almost $25 million to avoid litigating.
Trident Mortgage courted and extended credit to white customers in Philadelphia and the tri-state area between 2015 and 2019, while studiously avoiding doing business in majority-Black and Hispanic neighborhoods, according to the lawsuit.
Nearly all of Trident's loan officers were white – 64 of 68 during the relevant time period, according to the complaint — and 90% of the assistant loan officers were also white.
More than 90% of Trident’s open-house flyers and direct mail ads went to majority-white neighborhoods, and all the people pictured in those mailers – both models and loan agents — appeared to be white, the lawsuit said.
The company didn’t assign loan officers to solicit mortgage applications in majority-minority neighborhoods, according to the complaint.
In fact, just 12% of Trident’s mortgage loan applications came from majority-minority neighborhoods — even though people of color account for at least half of the residents in more than a quarter of neighborhoods in the Philadelphia metropolitan region, according to the government’s investigation.
By contrast, Trident’s competitors generated 21.5% of their applications from those same mostly minority neighborhoods – a “statistically significant” difference “across the five-year period and in every year analyzed.”
Trident favored white folks even on the rare occasions when it did do business in mostly minority neighborhoods. Well more than half of its loans in majority-minority census tracts – 57.7% — were made to white borrowers, according to the lawsuit.
The company received at least six separate fair lending reports that highlighted the problematic racial disparities, but Trident “took no meaningful action in response,” the government alleged.
Those are all indications of systemic racism.
Even more troubling, there were also indications of an openly racist culture. Employees shared messages that included slurs against almost every racial and ethnic minority population in the U.S., and racist jokes about offering “Free Watermelon” to Black customers, according to the government.
The Justice Department has lauded the agreement with Trident as one of the largest discriminatory lending settlements in its history — although that’s mostly because the federal government has largely failed to enforce housing discrimination laws since they began to be enacted in the 1960s (Consider, also, that the Philly metropolitan area has seen some of the steepest drops in housing stock, while the median home price has increased 61% over the past 10 years, the Philadelphia Business Journal reported in March).
Still, the joint investigation and settlement is a welcome development. The aggressive enforcement action is a bold but necessary step to combat a decades-old — and evolving — system of discrimination that has resulted in immeasurable opportunity costs for Black, Latino and other minority Americans.
(Reuters) - The U.S. government obtained a groundbreaking settlement last month in its lawsuit alleging that a large mortgage company deliberately and systematically avoided providing home loans to Black and Hispanic families in Pennsylvania, New Jersey and Delaware.
The July 27 settlement is the federal government’s first enforcement action against redlining by a nonbank lender and it’s a signal that certain agencies, and even state officials, will scrutinize those entities’ practices a lot closer going forward.
Under the deal, Trident Mortgage Co LP will pay $24.4 million to resolve the lawsuit, which alleged that the company prevented minority families from building wealth through home ownership, and artificially depressed the property values of those who do own their homes. The enforcement action was a joint effort by the Consumer Financial Protection Bureau, Department of Justice and the attorneys general of Delaware, New Jersey and Pennsylvania.
The settlement includes $18.4 million to subsidize loans to minority borrowers in Philadelphia and the surrounding metropolitan area. Trident is also required to establish at least four branch locations within majority-minority neighborhoods in the region, and to pay a $4 million civil fine.
The lawsuit has broader significance because mortgage companies have replaced banks as the dominant players in the U.S. mortgage market. The proportion of mortgages originated by nonbank lenders has been rising steadily since 2013, reaching 77% of all reported mortgages in May 2022, according to the Urban Institute’s Housing Finance Policy Center.
And, it’s worth noting that Trident is owned by Berkshire Hathaway Inc, the sixth-largest business conglomerate in the U.S. by market value, Reuters reported in March. (Billionaire Warren Buffet, who runs Berkshire Hathaway, wasn’t accused of any wrongdoing, according to the Reuters report.)
A spokesperson for Trident’s parent, HomeServices of America, said in an emailed statement that the company has “never denied or discouraged access to mortgage loans or other services based on race,” and touted the terms of the settlement agreement as a commitment to closing the racial gap in homeownership.
A Berkshire Hathaway representative didn't respond to a request for comment.
A Justice Department spokesperson told me the agency opened an investigation after receiving a referral from the CFPB. “We have multiple redlining investigation open at this time in cities around the nation,” the spokesperson said.
The lawsuit and settlement demonstrate the Biden administration’s commitment to combating discriminatory lending, and to extending a program to address modern-day redlining that started under former president Barack Obama. Federal authorities have historically been reluctant to take an aggressive approach in enforcing housing discrimination laws, and President Donald Trump took steps to roll back an Obama administration fair housing mandate in 2020.
The agreement doesn’t require Trident to admit to the allegations in the government’s complaint. But, of course, it’s worth considering the factual allegations that three states and two federal agencies asserted in a public lawsuit after investigating Trident, and which the company paid almost $25 million to avoid litigating.
Trident Mortgage courted and extended credit to white customers in Philadelphia and the tri-state area between 2015 and 2019, while studiously avoiding doing business in majority-Black and Hispanic neighborhoods, according to the lawsuit.
Nearly all of Trident's loan officers were white – 64 of 68 during the relevant time period, according to the complaint — and 90% of the assistant loan officers were also white.
More than 90% of Trident’s open-house flyers and direct mail ads went to majority-white neighborhoods, and all the people pictured in those mailers – both models and loan agents — appeared to be white, the lawsuit said.
The company didn’t assign loan officers to solicit mortgage applications in majority-minority neighborhoods, according to the complaint.
In fact, just 12% of Trident’s mortgage loan applications came from majority-minority neighborhoods — even though people of color account for at least half of the residents in more than a quarter of neighborhoods in the Philadelphia metropolitan region, according to the government’s investigation.
By contrast, Trident’s competitors generated 21.5% of their applications from those same mostly minority neighborhoods – a “statistically significant” difference “across the five-year period and in every year analyzed.”
Trident favored white folks even on the rare occasions when it did do business in mostly minority neighborhoods. Well more than half of its loans in majority-minority census tracts – 57.7% — were made to white borrowers, according to the lawsuit.
The company received at least six separate fair lending reports that highlighted the problematic racial disparities, but Trident “took no meaningful action in response,” the government alleged.
Those are all indications of systemic racism.
Even more troubling, there were also indications of an openly racist culture. Employees shared messages that included slurs against almost every racial and ethnic minority population in the U.S., and racist jokes about offering “Free Watermelon” to Black customers, according to the government.
The Justice Department has lauded the agreement with Trident as one of the largest discriminatory lending settlements in its history — although that’s mostly because the federal government has largely failed to enforce housing discrimination laws since they began to be enacted in the 1960s (Consider, also, that the Philly metropolitan area has seen some of the steepest drops in housing stock, while the median home price has increased 61% over the past 10 years, the Philadelphia Business Journal reported in March).
Still, the joint investigation and settlement is a welcome development. The aggressive enforcement action is a bold but necessary step to combat a decades-old — and evolving — system of discrimination that has resulted in immeasurable opportunity costs for Black, Latino and other minority Americans.
