The Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) announced jointly yesterday a $20 million settlement with lender Trident Mortgage, alleging that the company engaged in discriminatory lending practices as well as that employees used slurs and racist language in their internal communications.
According to a joint announcement from DOJ and CFPB, Trident illegally “redlined” its services in Philadelphia, Pennsylvania, excluding Black and Latin neighborhoods, concentrating its offices and marketing in predominantly white areas and “did not serve the credit needs of neighborhoods of color” during a period stretching from 2015 to 2019.
A senior Trident executive was also allegedly pictured in front of a Confederate flag and was not disciplined.
“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 Justice Department’s Civil Rights Division, in a statement.
Late last year, Attorney General Merrick Garland announced a specific initiative to target “modern-day redling” as recent probes by journalists, housing advocates and other law enforcement uncovered evidence of the practice all across the country.
Conditions of the settlement also include “assurances of nondiscrimination, outreach and equally attentive customer service to residents of the region’s majority-minority neighborhoods, anti-bias training, consumer financial education and community development partnerships,” according to a release from Pennsylvania Attorney General Josh Shapiro.
Trident is owned by Fox & Roach (which is owned by HomeServices of America), and was a top lender in the region before ceasing operations in 2020. In a statement provided to RISMedia, a HomeServices spokesperson noted that there was “no finding of wrongdoing by Trident” as part of the settlement, and claimed the company’s “mission and culture always reflected unwavering integrity and a commitment to fairness to all.”
“We strongly disagree with the agencies’ interpretation of Trident’s prior lending practices,” the spokesperson wrote. “Trident and any affiliated companies have never denied or discouraged access to mortgage loans or other services based on race.”
The DOJ announcement notes that the settlement is the first involving a non-bank lender and second-largest in the history of the department. Of the approximately $20 million settlement, $18.4 million will go to loan subsidies for neighborhoods of color in the Philadelphia area.
While race-based discrimination in lending was banned by the Fair Housing Act in 1968, both the effects of redlining—originally an explicit federal government policy—as well as continued lending discrimination and systemic biases have prevented people of color from building housing wealth.
“Last fall, I announced the Department’s Combatting Redlining Initiative and promised that we would mobilize resources to make fair access to credit a reality in underserved neighborhoods across our country,” Garland said in a statement. “As demonstrated by today’s historic announcement, we are increasing our coordination with federal financial regulatory agencies and state Attorneys General to combat the modern-day redlining that has unlawfully plagued communities of color.”
According to Shapiro, Trident will find another lender to disburse the subsidy funds, which he claimed could support up to 1,800 loans (at $10,000 each).
“This settlement will afford many individuals the chance at more affordable mortgages in minority neighborhoods. This settlement also serves as a message to mortgage lenders everywhere—we are here, we are watching, and this behavior will not be tolerated,” he said.