The Department of Justice (DOJ), Consumer Financial Protection Bureau (CFPB) and the Attorneys General of Pennsylvania, New Jersey, and Delaware, announced on July 27, 2022, that they had entered agreements with Trident Mortgage Company (Trident) resolving redlining allegations against Trident in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area (Philadelphia MSA).
In a complaint filed also on July 27, the CFPB alleged that Trident, owned by Berkshire Hathaway Inc., engaged in unlawful redlining from at least 2015 through 2019. The release states that this resolution is the first redlining settlement between the DOJ and a non-bank lender and the second largest redlining settlement in the department’s history. This complaint follows the first public complaint against a non-bank lender for redlining violations that was filed by the CFPB against Townstone Financial in 2020.
The complaint filed by the CFPB against Trident alleges that Trident:
- failed to provide mortgage lending services to neighborhoods of color in the Philadelphia metropolitan area;
- maintained offices concentrated primarily in majority-white neighborhoods; and
- did not serve the credit needs of neighborhoods of color.
The complaint was supported by statistical disparities in lending to majority-minority census tracts between Trident and its peers during the relevant period, a lack of advertising to these communities, and a loan officer composition that was comprised disproportionately of non-Hispanic, white employees. However, arguably the most striking evidence in the complaint concerns alleged emails sent and received by loan officers and other employees containing racial slurs, such as references to communities of color as “ghetto”.
Trident has agreed to invest over $20 million to increase credit opportunities in the Philadelphia MSA’s neighborhoods of color. Trident no longer operates a lending business; therefore, it will contract with another lender to provide loan subsidies and services to the alleged redlined communities. Additionally, Trident will ensure that the lender:
- employs at least four mortgage loan officers dedicated to servicing neighborhoods in and around Philadelphia, Camden, and Wilmington;
- maintains at least four office locations in those neighborhoods; and
- employs a full-time manager of community lending who will oversee the continued development of lending in neighborhoods of color in the Philadelphia metropolitan area.
Trident will also pay a civil money penalty of $4 million.
Trident entered agreements with Pennsylvania, New Jersey and Delaware to resolve allegations against Trident and its real estate affiliate, Fox & Roach LP. Trident will reimburse the states of Pennsylvania and New Jersey for costs incurred investigating discrimination. Also, Fox & Roach will invest $150,000 in marketing to communities of color in the Philadelphia metropolitan area.
This settlement is part of the DOJ’s Combatting Redlining Initiative. As part of the settlement announcement, Assistant Attorney General Kristen Clarke of the DOJ’s Civil Rights Division stated:
“This settlement ensures that significant lending resources will be infused into neighborhoods of color in and around Philadelphia that have historically experienced racial discrimination. Along with our federal and state law enforcement partners, we are sending a powerful message to lenders that they will be held accountable when they run afoul of our fair lending laws.”