Warren Buffett's Berkshire Hathaway subsidiary accused of discriminatory practices by Justice Department
A Pennsylvania mortgage company allegedly discriminated against Black and Latino buyers in Philadelphia, New Jersey and Delaware, the Justice Department said
A Pennsylvania mortgage company owned by billionaire businessman Warren Buffett's Berkshire Hathaway discriminated against Black and Latino homebuyers in three states, the Justice Department said Wednesday.
Trident Mortgage Co., a division of Berkshire's HomeServices of America, failed to write mortgages for homebuyers in Black and Latino neighborhoods in Philadelphia, New Jersey and Delaware, authorities said. As part of a settlement agreement, Trident will set aside $20 million to make loans in underserved neighborhoods.
"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," said Kristen Clarke, the assistant attorney general for the Justice Department’s Civil Rights Division, said in a statement.
The activity occurred between 2015 and 2019 — Trident stopped writing mortgages in 2020, the DOJ said. Trident also made racist comments about making loans to Black buyers, federal prosecutors allege.
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Warren Buffett, Chairman and CEO of Berkshire Hathaway, smiles as he plays bridge following the annual Berkshire Hathaway shareholders meeting in Omaha, Neb. (AP Photo/Nati Harnik, File / AP Newsroom)
The marketing materials used by Trident involved exclusively White individuals, and nearly all the company's staff were White.
Trident also agreed to hire mortgage loan officers in impacted neighborhoods as well as pay a monetary fine of $4 million. Because Trident no longer operates a lending business, a separate company will be contracted to provide the $20 million in loan subsidies, the DOJ said.
The Trident settlement also involves the first redlining case against a nonbank mortgage lender. Since the Great Recession, roughly half of all mortgages in the country have been underwritten by companies that immediately sell off the mortgage to investors. These nonbank lenders include firms such as Quicken Loans, Rocket Mortgage and Loan Depot, among many others.
"Credit discrimination is illegal regardless of whether the lawbreaking company is a traditional bank or a nonbank lender," said Rohit Chopra, director of the Consumer Financial Protection Bureau.
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The Associated Press contributed to this report.