Berkshire Hathaway-owned lender settles redlining case with DOJ for $24 million
“This settlement is a stark reminder that redlining is not a problem of a bygone era,” Assistant Attorney General Kristen Clarke of the department’s civil rights division said in a statement Wednesday announcing the settlement. “Trident’s illegal redlining activity has deprived communities of color of equal access to residential mortgages, deprived them of the opportunity to create wealth, and devalued properties in their neighborhoods.”
Berkshire Hathaway HomeServices, the parent company of Trident, said in a statement that it strongly disagreed with the agencies’ interpretation of Trident’s past lending practices. “Trident and any affiliates have never withheld or discouraged access to mortgages or other services based on race,” the company said, adding that it is committed to serving homebuyers. in all the communities where it operates.
Redlining means 45 million Americans are breathing dirtier air, 50 years after it ended
Redlining is an illegal practice used to deny equal access to home loans, often based on racial characteristics of the applicant’s neighborhood. In the 1930s, government surveyors ranked neighborhoods in more than 200 cities, coding them green for “best,” blue for “still desirable,” yellow for “definitely in decline,” and red for ” dangerous “. The “highlighted” areas were those that local lenders considered to be credit risks, largely because of the racial and ethnic demographics of the residents. Although it was banned more than 50 years ago, studies show that its consequences have been far-reaching, from lowering home values to increasing poverty and exposing marginalized residents to higher pollution levels.
As part of the agreement to resolve the allegations, Trident will invest more than $20 million to increase lending opportunities in area neighborhoods of color, the department said. Since the company is no longer in the lending business, it will contract with another company to provide loan grants and services to affected communities in and around Philadelphia, Camden and Wilmington. Trident also agreed to pay a civil penalty of $4 million.
U.S. Attorney General Merrick Garland last year created an initiative within the Justice Department to combat redlining, joining other agencies in tackling new iterations of discrimination in of accommodation.
Redlining was banned 50 years ago. It still hurts minorities today.
The Department of Justice and the Consumer Financial Protection Bureau conducted a joint investigation into Trident’s practices, with assistance from the U.S. Attorney’s Office for the Eastern District of Pennsylvania and in coordination with the attorneys general of Pennsylvania, New Jersey and of Delaware.
One of the world’s largest public companies, Berkshire Hathaway is led by investor Warren Buffett, whose acquisitions and investment strategies have long been studied by corporate executives and market watchers. The Bloomberg Billionaire Index puts his personal fortune north of $99 billion.