DOJ reaches ‘historic’ redlining deal with Philadelphia mortgage lender

The Justice Department on Wednesday announced what it described as one of the biggest redlining settlements in its history against a Philadelphia-area mortgage lender who officials said had withheld home loans from borrowers black and Latino prospects for years due to discriminatory lending practices.

Trident Mortgage Company – a subsidiary of Berwyn-based Berkshire Hathaway HomeServices Fox & Roach, Realtors – has agreed to set aside more than $20 million to provide loans to underserved neighborhoods in the city, South Jersey and of Delaware, department and consumer officials said the Office of Financial Protection.

“Trident’s illegal redlining activity has deprived communities of color of equal access to residential mortgages, deprived them of the opportunity to build wealth, and devalued properties in their neighborhoods,” said Kristen Clarke, Assistant Attorney General for the Department of Justice’s Civil Rights Division.

The payment comes after a four-year investigation, which showed that between 2015 and 2019, the company actively avoided issuing mortgages for homes in majority-minority neighborhoods, maintained an almost all-white staff and ignored warnings that their lending practices were likely in violation of the federal Fair Housing Act.

Additionally, according to the department, Trident loan officers and Fox & Roach real estate agents regularly exchanged racist emails, some of which contained racial slurs or referred to certain areas of Philadelphia as a “ghetto.”

A message, sent under the headline “You know when you’re in the hood” and highlighted in a 23-page lawsuit filed Wednesday in federal court in Philadelphia, contained a photo of a wheelbarrow full of watermelons with a sign reading ” Ask for a credit card. Free watermelon.

Another depicted a Trident senior vice president posing in front of a Confederate flag.

“It was systemic racism — plain and simple,” said Pennsylvania Attorney General Josh Shapiro, who along with his counterparts in New Jersey and Delaware signed separate agreements with the company. He added: “These are real people. People who have been ignored and who have been hurt and left behind.

A spokesperson for HomeServices of America, the parent company of Berkshire Hathaway HomeServices Fox & Roach, Realtors, disputed the allegations in a statement and pointed out that Trident, which stopped issuing mortgages in 2020, had only admitted no wrongdoing under the agreement.

“We are committed to supporting additional loans that will help close the racial gap in homeownership,” the statement said. “Trident’s mission and culture have always reflected unwavering integrity and a commitment to fairness to all. We do not tolerate any form of discrimination. »

State and federal officials announced the settlement agreement during a press conference at Malcolm X Park in West Philadelphia, one of the city’s neighborhoods historically shaped by redlining – the discriminatory lending practice in which banks and mortgage lenders sought to avoid offering services to minorities and low-income neighborhoods.

The practice has been banned since the 1960s, but it has persisted in less overt and more pernicious ways.

Trident, for example, operated 51 of its 53 offices in predominantly white neighborhoods in the Philadelphia area, Justice Department officials said.

Of the 68 loan officers employed by the company, 64 were white — a racial makeup that quietly discouraged active outreach to minority communities, DOJ officials said.

Two of four black loan officers employed by the company were fired and not replaced in 2018.

Moreover, according to the ministry, the company made “virtually no effort” to market to residents of majority minority neighborhoods. The flyers he sent out featured white models and loan officers.

According to the lawsuit, these practices resulted in significant disparities in Trident’s lending. Of the roughly 30,700 mortgage applications the company said it received between 2015 and 2019, only 12% came from majority-minority neighborhoods. Meanwhile, that rate at other comparable lenders was over 21%.

Peer lenders generated applications from high-minority neighborhoods at more than 2.5 times Trident’s rate, according to the lawsuit.

In terms of actual mortgages issued, less than 12% of Tridents were for properties in majority-minority neighborhoods — and even of those, nearly 58% of loans were issued to white borrowers, the ministry said. Justice.

These results reflect broader trends in the Philadelphia real estate market identified by the Center for Investigative Reporting. in a 2018 report.

The survey found that prospective black homeowners in Philadelphia were 2.7 times more likely than white homeowners to be denied a conventional mortgage, even controlling for applicants’ income, loan amount and neighborhood.

And although the number of black and white residents living within the city limits was about the same, white residents received about 10 times more conventional mortgages.

The survey found that the greater the number of black and Latino residents in a neighborhood, the more a loan application there would be turned down, even after controlling for income and other factors.

These disparities have inhibited the ability of minority families to build up real estate wealth over time. Nationally, the median wealth of a black family is around $24,000, while that of white families is around $188,000.

A white family is 30% more likely to own a home than a black family – a bigger gap than in 1960 when the Fair Housing Act was passed.

“For too many years, black, Latino and other communities of color in Philadelphia have not had equal access to lending and owning legal documents,” U.S. District Attorney Jacqueline Romero said Wednesday. eastern Pennsylvania. “These historically bounded areas of Philadelphia continue to experience disproportionate levels of poverty, poor health outcomes, low education, unemployment, and violent crime.”

As part of the settlement, Trident agreed to create an $18.4 million loan grant for neighborhood residents of color and set aside $2 million to fund outreach and education efforts targeting potential borrowers. blacks and latinos.

The company also agreed to pay a civil penalty of $4 million.

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