DOJ: Buffett company discriminated against black homebuyers

NEW YORK — A Pennsylvania mortgage company owned by billionaire businessman Warren Buffett’s company discriminated against would-be black and Latino homebuyers in Philadelphia, New Jersey and Delaware, the Justice Department said Wednesday in what is being called the second-largest redlining scheme in history. .

Trident Mortgage Co., a division of Berkshire Hathaway’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 Department of Justice and the Consumer Financial Protection Bureau said in their settlement with Trident.

As part of the deal with the government, Trident will have to 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.

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

Hughes’ father worked for one of Black’s oldest savings and loans, a company called Berean that financed mortgages for black families when they were turned down by other banks and lenders.

“People would come up to me and say, ‘Vince, your father gave me a mortgage on my first house when I was turned down everywhere. I couldn’t have bought my house without Berean and your father,” Hughes said. “We witnessed that discrimination in real time.”

Redlining is a term used to describe when banks intentionally fail to lend to non-white communities. Banks and the US government drew on maps in red highlighting neighborhoods deemed undesirable to provide home loans. 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 alleged redlining activity occurred 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, targeting certain neighborhoods. called ‘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 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 Wednesday that found that 95% of all home appraisers in the city were white, and that a racial divide persists between the valuation of black homeowners’ homes and white-owned homes.

Hughes said he and other lawmakers were outraged by revelations of the redlining by Trident and others in a 2018 investigation by Reveal into Buffett’s mortgage companies. They pushed for Shapiro at a hearing on credits, and the attorney general responded by setting up a hotline to collect personal stories.

As part of the settlement, Trident 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 Justice Department 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 Justice Department’s and CFPB’s findings in the settlement, noting that Trident did not have 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.

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

“That’s what these companies do, right? None of them admit it, they just pay the money,” he said.

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AP Reporter Claudia Lauer contributed to this report from Philadelphia. AP Business Writer Josh Funk contributed from Omaha, Nebraska.