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Warren Buffett

Billionaire businessman Warren Buffett speaks at a Fortune Most Powerful Women in Washington, D.C. on October 26, 2013. (Photo: Fortune Live Media/flickr/cc)

'Racism—Pure and Simple': Buffett Lender Redlined Philly-Area Homebuyers, Says DOJ

"This settlement is a stark reminder that redlining is not a problem from a bygone era," said Kristen Clarke, an assistant U.S. attorney general, announcing a $20 million deal with Trident Mortgage.

Brett Wilkins

The U.S. Justice Department announced Wednesday that a mortgage company owned by billionaire businessman Warren Buffett engaged in an illegal "pattern or practice of lending discrimination" by "redlining" in the Philadelphia area, and will pay $20 million in a settlement agreement.

"The complaint also alleges that Trident's employees exchanged emails where they referred to neighborhoods of color as 'ghettos' and made racist jokes."

The DOJ, which launched a Combatting Redling Initiative last October, is calling the deal the first it has ever reached with a nonbank lender and the second-largest settlement in the agency's history involving the illegal practice of denying mortgage loans to potential homebuyers of color.

The U.S. Consumer Financial Protection Bureau alleged in a complaint filed Wednesday that from at least 2015 until 2019, Trident Mortgage Company—which is owned by Buffett's Berkshire Hathaway Inc.—violated the Fair Housing Act and the Equal Credit Opportunity Act by avoiding "providing home loans and other home mortgage services in majority-minority neighborhoods" in metropolitan Philadelphia, including in New Jersey and Delaware. The lender also "discouraged those living in, or seeking credit to purchase properties in, these neighborhoods from seeking or applying for credit from Trident."

Under the terms of the agreement, Trident will invest over $20 million in boosting credit opportunities in neighborhoods of color in the Philadelphia metropolitan area.

"This settlement is a stark reminder that redlining is not a problem from a bygone era. 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, assistant attorney general of the U.S. Justice Department's Civil Rights Division, announcing the deal.

"Along with our federal and state law enforcement partners, we are sending a powerful message to lenders that they will be held accountable when they run afoul of our fair lending laws," she added.

Speaking at a Wednesday press conference announcing the settlement, Clarke said that "Trident's office locations were concentrated in majority-white neighborhoods, and that Trident's loan officers were directed to not to serve—and did not serve—the credit needs of neighborhoods of color."

"The complaint also alleges that Trident's employees exchanged emails where they referred to neighborhoods of color as 'ghettos' and made racist jokes," she added. "There's even a photo of a senior Trident manager posing in front of a Confederate flag."

Jacqueline Romero, the U.S. attorney for the Eastern District of Pennsylvania, asserted that "for far too many years Philadelphia's Black, Latino, and other communities of color have lacked equal access to lending and legal deed ownership. These historically redlined areas of Philadelphia continue to experience disproportionate amounts of poverty, poor health outcomes, limited educational attainment, unemployment, and violent crime."

Pennsylvania Attorney General Josh Shapiro, a Democrat, said that "this was systemic racism—pure and simple. This is about real people. People who were ignored and who were harmed and left behind."

Although redlining officially ended following the passage of the Fair Housing Act in 1968, studies have shown the policy persists in practice in scores of metropolitan areas across the nation. Additionally, communities that were redlined remain predominantly minority and low-income today. A 2015 study by the National Community Reinvestment Coalition found that in Baltimore, race—and not economic status—was the most important factor in mortgage lending. Formerly redlined communities also face greater climate-related risks.


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