DOJ: Buffett company discriminated against black homebuyers

NEW YORK (AP) – A Pennsylvania mortgage company owned by Berkshire Hathaway billionaire businessman Warren Buffett discriminated against would-be black and Latino homebuyers in Philadelphia, New Jersey and Delaware, the Justice Department said Wednesday in what is the second-largest is called redlining. settlement in history.

Trident Mortgage Co., a division of Berkshire’s HomeServices of America, deliberately avoided writing mortgages in minority-majority neighborhoods in West Philadelphia, such as Malcolm X Park; Camden, New Jersey; and in Wilmington, Delaware, the DOJ and the Consumer Financial Protection Bureau said in their settlement with Trident. As part of the agreement with the DOJ and the CFPB, Trident must set aside $20 million to provide loans in underserved neighborhoods.

“Trident’s illegal redlining activity denied communities of color equal access to home mortgages, deprived them of the ability to build wealth and devalued property in their neighborhoods,” said Kristen Clarke, an assistant attorney general in the Civil Rights Division of the United Nations. Ministry of Justice, in a statement. prepared statement.

Redlining is a term used to describe when banks intentionally fail to lend to non-white communities. Banks and the US government drew on red-marked maps those neighborhoods deemed undesirable to provide home loans — hence the term “redlining.” The neighborhoods were almost always areas where racial minorities lived, and even included other historically discriminated communities such as Jewish neighborhoods.

The practice basically cut off entire communities from the primary path to wealth generation in the US: homeownership. To this day, black and Latino households are much less likely to own their homes compared to their white counterparts.

The redlining activity that DOJ alleged took place between 2015 and 2019 – Trident stopped writing mortgages in 2020. In addition to avoiding mortgages in minority neighborhoods, Trident employees made racist comments about lending to black homebuyers, they called certain neighborhoods “ghettos.” A Trident manager was photographed posing in front of the Confederate Flag. The marketing materials used by Trident were exclusively white individuals, and nearly all of the company’s personnel were white.

Josh Shapiro, The Pennsylvania Attorney General, who is running for governor, called Trident’s behavior “systematic racism, pure and simple.”

Philadelphia has a long history of racism against black homebuyers. The Philadelphia City Council released a report on Wednesday which found that 95% of all appraisers of Philly’s homes were white and that there is still a racial divide between how homes owned by black homeowners are valued versus homes owned by white owners.

Trident also agreed to hire mortgage advisers in the affected neighborhoods and pay a $4 million fine. Since Trident no longer has a loan company, a separate company will be contracted to provide the $20 million in loan grants, the DOJ said.

The Trident settlement also includes the first redlining case against a non-bank mortgage lender. Since the Great Recession, about half of all mortgages in the country have been underwritten by companies that immediately resell the mortgage to investors. These non-bank lenders include companies such as Quicken Loans, Rocket Mortgage, and Loan Depot.

“Credit discrimination is illegal whether the company violating the law 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 they “completely disagree” with the DOJ and CFPB’s findings in the settlement, noting that Trident was not required to admit that he had committed wrongdoing as part of the case. Buffett himself did not immediately respond to a request for comment, but has historically deferred any comment to Berkshire’s subsidiaries.

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