DOJ: Buffett’s company discriminated against black homebuyers

New York (AFP) – A Pennsylvania mortgage company owned by billionaire businessman Warren Buffett, Berkshire Hathaway, has discriminated against potential black and Latino homebuyers in Philadelphia, New Jersey and Delaware, in what is being called the second largest red line, the Justice Department said on Wednesday. settlement in history.

Trident Mortgaging, a division of America’s premier service in Berkshire, deliberately avoided writing mortgages in minority-majority neighborhoods in West Philadelphia such as Malcolm X Park; Camden, NJ; And in Wilmington, Delaware, the Department of Justice and the Consumer Financial Protection Bureau said in a settlement with Trident. As part of the agreement with the Department of Justice and the CFPB, Trident will have to allocate $20 million to provide loans in disadvantaged neighborhoods.

“Illegal Trident housing replanning activity has denied communities of equal color access to residential mortgages, deprived them of the opportunity to build wealth, and reduced the property value in their neighborhoods,” said Kristen Clark, assistant attorney general for the Department of Justice’s Civil Rights Division. prepared statement.

Redlining is a term used to describe when banks deliberately avoid making loans to non-white communities. Banks and the US government used to draw on maps in red those neighborhoods deemed undesirable to offer home loans – hence the term “red line”. Neighborhoods have almost always been areas where ethnic minorities live, and even include other communities that have historically been discriminated against such as ghettos.

This practice effectively isolates entire communities from the primary pathway of wealth creation in the United States: home ownership. To this day, black and Latino families are less likely to own their own homes than their white counterparts.

redlining activity that the DOJ claimed occurred between 2015 and 2019 – Trident stopped writing mortgages in 2020. Besides avoiding making mortgages in minority neighborhoods, Trident employees made racist comments about making loans to black homebuyers, describing certain neighborhoods as “Jewish Quarters”. One of the Trident managers is photographed standing in front of the Confederate flag. The marketing materials used by Trident included exclusively white individuals, and nearly all of the company’s employees were white.

Josh Shapiro The Pennsylvania attorney general, who is running for governor, described Trident’s behavior as “systemic racism, pure and simple.”

Philadelphia has a long history of racism towards black home buyers. The Philadelphia City Council released a report on Wednesday which found that 95% of all Philly home appraisers were white and that there was still a racial gap between how homes owned by black homeowners were valued versus homes owned by white owners.

Trident also agreed to hire mortgage loan officers in affected neighborhoods in addition to paying a $4 million fine. The Justice Department said that because Trident no longer operates a lending business, a separate company will be contracted to provide $20 million in loan subsidies.

The Trident settlement also includes the first redlining case against a non-bank mortgage lender. Since the Great Recession, nearly half of all mortgages in the country have been guaranteed by companies that immediately sell the mortgage to investors. These non-bank lenders include companies like Quicken Loans, Rocket Mortgage, and Loan Depot, among many others.

“Credit discrimination is illegal regardless of whether the offending company 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 it “strongly disagrees” with the findings of the Department of Justice and the CFPB in the settlement, noting that Trident did not have to admit wrongdoing as part of the case. Buffett himself did not immediately respond to a request for comment, but he has historically deferred any comment to Berkshire’s subsidiaries.

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