DOJ: Berkshire Hathaway division discriminated against Black, Latino homebuyers
A mortgage company owned by Warren Buffett’s Berkshire Hathaway discriminated against Black and Latino homebuyers when it avoided to write mortgages in minority-majority neighborhoods in the Philadelphia metropolitan area, the Department of Justice and Consumer Financial Protection Bureau announced Wednesday.
Why it matters: Trident Mortgage Company, a division of Berkshire HomeServices of America, agreed to resolve allegations that it engaged in a pattern or practice of lending discrimination by “redlining” in what the Justice Department said was its second largest redlining settlement and its first against a non-bank lender.
How it works: Redlining occurs when banks or mortgage companies deliberately refuse to underwrite mortgages based on race and ethnicity.
- The agencies said Trident deliberately avoided writing mortgages in neighborhoods in Philadelphia, in Camden, New Jersey and in Wilmington, Delaware.
By the numbers: As part of the settlement, Trident will invest over $20 million to increase credit opportunities in neighborhoods of color in the Philadelphia metropolitan area.
- At least $18.4 million will go toward a loan subsidy fund for residents of neighborhoods of color in the area, $750,000 to developing community partnerships to provide services that increase access to residential mortgage credit and $375,000 toward consumer financial education.
- The company no longer has a lending business, so it will contract another lender to provide loan subsidies and services to the affected communities, the department said.
- The company will also pay a civil money penalty of $4 million and has entered into agreements with the state governments of Pennsylvania, New Jersey and Delaware.
What they're saying: “Last fall, I announced the Department’s Combatting Redlining Initiative and promised that we would mobilize resources to make fair access to credit a reality in underserved neighborhoods across our country,” Attorney General Merrick Garland said in a statement Wednesday.
- “As demonstrated by today’s historic announcement, we are increasing our coordination with federal financial regulatory agencies and state Attorneys General to combat the modern-day redlining that has unlawfully plagued communities of color," he added.
Go deeper: Philadelphia's redlining legacy persists