DOJ: Berkshire Hathaway division discriminated against Black, Latino homebuyers
Add Axios as your preferred source to
see more of our stories on Google.
Warren Buffett in New York City in September 2017. Photo: Taylor Hill/FilmMagic
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
