Fine of more than $22 million brought against mortgage firm for ‘redlining’ in Philadelphia area

A fine of more than $22 million has been assessed against a Delaware mortgage company for alleged intentional discrimination against families living in mostly minority Philadelphia neighborhoods, the federal consumer financial protection agency said Wednesday.

According to the Consumer Financial Protection Bureau (CFPB), the bureau joined with the Department of Justice (DOJ) to bring a settlement – including the fine – against Trident Mortgage Company, a Delaware corporation that is 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., the CFPB said.

The bureau said that it and the DOJ allege that Trident “redlined” majority-minority neighborhoods through its marketing, sales, and hiring actions. Specifically, the agencies said, Trident’s actions discouraged prospective applicants from applying for mortgage and refinance loans in the greater Philadelphia area’s majority-minority neighborhoods.

More specifically, the CFPB and DOJ claimed that Trident, through its redlining actions, actively discouraged applications from the people living in the majority-minority Philadelphia-area 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,” the CFPB said. “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.

“Of the mortgage loan applications Trident did receive from applicants in majority-minority neighborhoods, most of the applicants were white,” the CFPB said. “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 agencies said Trident’s alleged actions violated the Equal Credit Opportunity Act (ECOA) and the Consumer Financial Protection Act (CFPA). The DOJ also alleged a violation of the Fair Housing Act (FHA).

The settlement proposed to the court, the CFPB said, would among other things require Trident to pay $18.4 million into a loan subsidy program and 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, the agency said.

In addition to the fines, the CFPB said, the settlement would require the firm to 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 metropolitan statistical area (MSA).

CFPB, DOJ Order Trident Mortgage Company to Pay More Than $22 Million for Deliberate Discrimination Against Minority Families