Warren Buffett Loan Firm In NJ Pays $20M For Racial Discrimination: DOJ

SOUTH JERSEY — A mortgage firm owned by multibillionaire Warren Buffett will pay $20 million to resolve allegations of redlining and racial discrimination that extended to New Jersey, according to the Department of Justice. The federal complaint against Trident Mortgage Company LP outlines allegations of discriminatory lending practices, avoidance of majority-minority neighborhoods, racist emails from employees and unheeded warnings that the company's practices may break the law.

The home-mortgage company operated in New Jersey, Pennsylvania and Delaware until its 2020 closure. The business had a heavy presence in the Philadelphia Metropolitan Statistical Area (MSA), which includes New Jersey's Burlington, Camden, Gloucester and Salem Counties. Berkshire Hathaway was Trident's ultimate holding company.

From 2015-19, Trident "engaged in a practice of unlawful redlining," according to a federal complaint. Redlining, in this case, refers to discriminatory practices in which banks and mortgage lenders systemically underserve neighborhoods with high percentages of marginalized racial and ethnic minorities. Redlining deprives such areas and their residents of adequate credit, cutting off people and communities from opportunities for economic growth and leaving residents more vulnerable to predatory lending.

As of 2019, the Philadelphia MSA's population was 20 percent Black, 10 percent Hispanic and 6 percent Asian, according to the federal complaint. Out of the metro area's 1,464 census tracts, 425 have majority-minority populations.

Although 29 percent of the Philadelphia MSA's census tracts are majority-minority, Trident placed 51 of its 53 offices in majority-white neighborhoods from 2015-19, the complaint states. Trident took no steps to direct loan officers — who were almost entirely white — to generate loans outside of their office's immediate vicinity, according to the DOJ.

"By concentrating nearly all its offices in majority-white areas, Trident discouraged residents of majority-minority areas from applying for and obtaining home loans from Trident and restricted their access to credit," the complaint says.

Out of the 68 loan officers Trident employed in the Philadelphia MSA from 2015-19, 64 were white and four were Black, authorities said. Trident terminated two of the Black loan officers by 2018, the complaint states.

Trident loan officers sent around several emails containing racial slurs and racist content from at least 2016-18, according to the DOJ. Some of the emails indicated an intention to avoid lending in majority-minority neighborhoods, the complaint says.

An employee of Fox & Roach — also part of Berkshire Hathaway — forwarded a racist email entitled "Being White, Reminder" to a Trident assistant loan officer, the complaint states. The Trident employee forwarded to several others the email, which contained several ethnic and racial slurs, including the N-word, and the statement, "BE PROUD TO BE WHITE!"

"You call me ‘White boy’, ‘Cracker’, ‘Honkey’, ‘Whitey’, ‘Caveman’... And that’s OK... But when I call you (anti-Black slur), (antisemitic slur), (anti-Arab slur), (anti-Arab slur), (anti-Arab slur), (anti-Hispanic slur), (anti-Asian slur), or (anti-Chinese slur)... You call me a racist," the email said, according to court documents.

On another occasion, a Fox & Roach real estate agent forwarded an email to a Trident loan officer entitled "YOU KNOW YOU'RE IN THE HOOD," the complaint says. The email contained several racist images and racial slurs, including the N-word, according to court documents. One picture showed a wheelbarrow filled with watermelons that said, "Apply for a Credit Card Free Watermelon," while another image showed a liquor store sign with the message "SORRY—CLOSED A (anti-Black slur) ROBBED US... AGAIN," authorities said.

In 2019, Trident staff emailed around a photo of the company's senior vice president and general manager posing with others in front of a Confederate flag, the complaint says. Upon learning about the photo, Trident took no action against them, according to the DOJ.

The federal complaint does not publicly identify any employees.

From 2015-19, Trident's fell far behind its peer lenders in generating home-mortgage applications from majority-minority neighborhoods in the Philadelphia MSA, the complaint says. The peer lenders made loans in high-minority areas at nearly 2.5 times Trident's rate, while also providing loans to high-minority areas at twice Trident's rate, according to the complaint.

Trident was aware as far back as 2015 that it created a risk of violating fair-lending laws, the DOJ says. From September 2015 to April 2018, Trident received at least six separate reports from third-party vendors stating that the company's application volume from Black and Hispanic potential borrowers was low compared to both the area's population and the performance of its peers, according to the complaint.

The mortgage company took no meaningful action to rectify these issues until the Consumer Financial Protection Bureau said it would be subject to a fair-lending examination, the DOJ says.

The settlement requires Trident to create an $18.4 million fund to provide individual subsidies of up to $10,000 per qualified applicant for home-purchase, refinance and home-improvement loans for owner-occupied homes in majority-minority neighborhoods.

Trident must also spend $875,000 on targeted advertising and public outreach to generate awareness of the loan-subsidy fund. Additionally, $750,000 must support a Community Development Partnership Program, which will fund collaborations with local community-based or governmental organizations that will help extend credit to qualified borrowers.

"Today’s landmark settlement is a critical step in advancing the cause of housing equity in our region," Acting New Jersey Attorney General Matthew J. Platkin said Wednesday. "It sends a clear signal: We will never tolerate race-based bias or race-driven business practices that deny equal opportunity to individuals and families of color seeking housing in our state."