A Pennsylvania mortgage company owned by Warren Buffett’s Berkshire Hathaway (BRK.A) has been accused of intentionally discriminating against potential Black and Latino homebuyers, the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) said on July 27.
Trident Mortgage Company, a subsidiary of Berkshire Hathaway’s HomeServices of America, deliberately avoided writing mortgages in majority-minority neighborhoods in Philadelphia, New Jersey and Delaware between 2015 and 2019, according to a joint press release by the DOJ and the CFPB. Trident ended its mortgage business in 2020.
The two federal agencies have ordered Trident to pay a $4 million civil penalty to the CFPB and set aside more than $18 million to make loans in underserved neighborhoods. Since Trident no longer writes mortgages, a separate company will be contracted to offer loan subsidies to qualified applicants, the DOJ said.
The settlement is the second largest government resolution against illegal redlining activities in history, the CFPB said. Redlining is a real estate term used to describe when banks deny a creditworthy applicant a loan.
“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,” Kristen Clarke, an assistant Attorney General of the Justice Department’s Civil Rights Division, said in a statement.
“Trident illegally redlined neighborhoods in the Philadelphia area, excluding qualified families seeking to own a home,” said CFPB Director Rohit Chopra. “With housing costs so high, it is critical that illegal discrimination does not put homeownership even further out of reach.”
In an emailed statement, a spokesperson for HomeServices of America, Trident’s parent company, said Trident disagrees with the government’s interpretation of the company’s prior lending practices.
“Trident and any affiliated companies have never denied or discouraged access to mortgage loans or other services based on race. We are committed to continuing to work to find more ways to serve homebuyers in every community we serve,” the spokesperson said.
