WASHINGTON—Alleging violations of laws against redlining, the Consumer Financial Protection Bureau and U.S. Department of Justice have taken action to end Trident Mortgage Company’s “intentional discrimination: against families living in majority-minority neighborhoods in the greater Philadelphia area.
The CFPB and DOJ are alleging Trident redlined majority-minority neighborhoods through its marketing, sales, and hiring actions.
“Specifically, Trident’s actions discouraged prospective applicants from applying for mortgage and refinance loans in the greater Philadelphia area’s majority-minority neighborhoods,” the CFPB said.
If entered by the court, the Bureau said the settlement, among other things, would require Trident to pay a $4 million civil penalty to the CFPB to use for the CFPB’s victims’ relief fund. The Attorneys General of Pennsylvania, New Jersey, and Delaware also finalized concurrent actions.
Trident Mortgage Co. is a limited partnership incorporated in Delaware and a wholly owned subsidiary of Fox and Roach/Trident LP, which is owned by Home Services of America, Inc. The ultimate holding company of Trident is Berkshire Hathaway, Inc.
Until it stopped accepting mortgage loan applications in 2021, Trident was a non-depository mortgage company operating in Delaware, Maryland, New Jersey, and Pennsylvania, the Bureau stated.
Between 2015 and 2017, about 80% of Trident’s mortgage applications came from the Philadelphia Metropolitan Statistical Area,” according to the Bureau.
How Scheme Worked
The complaint describes how Trident redlined majority-minority neighborhoods in the Philadelphia MSA and actively discouraged applications from the people living in those neighborhoods. Trident’s self-defined market areas included majority-minority neighborhoods.
“However, Trident’s application data show it did not serve neighborhoods within its market areas equally. Only 12% of its mortgage loan applications came from majority-minority neighborhoods, even though more than a quarter of neighborhoods in the Philadelphia MSA are majority-minority,” the Bureau said in announcing its action. “Of the mortgage loan applications Trident did receive from applicants in majority-minority neighborhoods, most of the applicants were white. For example, in Philadelphia MSA neighborhoods that were more than 80% minority, more than half of the applications Trident generated were from white applicants, the CFPB said.
Trident’s discriminatory actions, alleged by the CFPB and the DOJ, violated the Equal Credit Opportunity Act and the Consumer Financial Protection Act. The DOJ also alleged a violation of the Fair Housing Act.
The Specifics
Specifically, the CFPB said the government’s investigation uncovered a wide range of “problematic” conduct by Trident, such as:
- Distributing racist language and messages about certain neighborhoods. “Trident’s loan officers, assistants, and other employees received and distributed e-mails containing racial slurs and racist content. In addition to using racist tropes and terms, communications sent on work e-mails included content specifically related to real estate properties’ locations and appraisals. The racist content also targeted the people living in majority-minority neighborhoods.”
- Avoiding sending its loan officers to market to majority-minority neighborhoods. “Trident’s loan officers worked out of 53 different offices in the Philadelphia MSA, the locations of which were displayed on Trident’s website. Fifty-one of those offices were in majority-white neighborhoods,” the Bureau said. “The other two offices were in neighborhoods with minority groups representing roughly 50% of the population. All 23 offices within the Philadelphia and Camden metropolitan areas that were within Trident’s lending area were in majority-white neighborhoods.”
- Developing marketing campaigns and advertisements that discouraged and ignored minority mortgage loan applicants. “For example, between 2015 and May 2018, Trident conducted fifteen direct mail marketing campaigns. All the individuals pictured in the campaigns’ marketing materials—both models and Trident employees—appeared to be white. These direct mail marketing campaigns would have discouraged applicants from majority-minority neighborhoods,” the CFPB said. “Additionally, Trident targeted its marketing materials to majority-white neighborhoods. Trident’s open house flyers, for instance, were overwhelmingly concentrated in majority-white neighborhoods, and its online advertisements appeared for home listings overwhelmingly located in majority-white neighborhoods.”
Enforcement Action
The proposed order, if entered by the court, would be CFPB’s first nonbank mortgage redlining resolution and it would require Trident, among other things, to:
- Pay $18.4 million into a loan subsidy program. “To increase nondiscriminatory access to credit, Trident will establish a loan subsidy program. A lender it contracts with to make the loans will offer loans to qualified applicants on a more affordable basis when borrowing to purchase properties in majority-minority neighborhoods in the Philadelphia MSA. The loan subsidies can include closing cost assistance, down payment assistance, and payment of mortgage insurance premiums. Through the lender it contracts with to make loans under the subsidy fund, Trident will ensure the lender has four offices located in majority-minority neighborhoods. These lending offices will provide similar services to those provided through Trident’s offices.”
- Pay a $4 million fine: Trident will pay a $4 million penalty to the CFPB, which will be used for the CFPB’s victims’ relief fund.
- Pay an additional $2 million: Trident must spend $2 million to fund advertising to generate applications in redlined areas and take other steps to serve the credit needs of majority-minority neighborhoods in the Philadelphia MSA.