(Reuters) — A Pennsylvania mortgage company owned by Warren Buffett’s Berkshire Hathaway Inc. has reached a $24.4 million settlement to resolve allegations by the U.S. government that it intentionally discriminated against black and Hispanic families in the Philadelphia area.
The Justice Department and the Consumer Financial Protection Bureau said Trident Mortgage Co. from 2015 to 2019 deliberately avoided writing mortgages and discouraged people from applying for mortgages in majority-minority neighborhoods, known as redlining.
Wednesday’s settlement, including a $4 million fine, is part of an initiative announced last October by Attorney General Merrick Garland to combat discriminatory lending.
The agencies said that by denying minorities equal access, including by placing loan officers almost exclusively in majority-white neighborhoods, Trident prevented them from building wealth through their homes, which lowered property values in Philadelphia; Camden, New Jersey; and Wilmington, Delaware.
They also said Trident tolerated a racist culture, citing its failure to discipline a senior vice president who posed for a photo in front of a Confederate flag, and employee emails that referred to underserved communities as “ghetto”; and one that exclaimed ” BE PROUD TO BE WHITE!”
Trident neither admitted nor denied wrongdoing. The company and its subsidiary Fox & Roach also entered into related settlements with Pennsylvania, New Jersey and Delaware.
HomeServices of America, a Berkshire unit and Trident’s parent, said in a statement that it was committed to helping “close the racial gap in homeownership,” and that Trident never denied or discouraged access to mortgages based on race.
“We strongly disagree with the agencies’ interpretation of Trident’s past lending practices,” HomeServices said.
Mr. Buffett was not charged with a crime.
In addition to paying the $4 million fine, Trident will spend $18.4 million to subsidize loans for minorities in Philadelphia, and $2 million on education and credit needs in red areas.
Trident stopped making mortgages last year and will contract with another lender for the subsidies.
“This settlement is a stark reminder that redlining is not a problem of a bygone era,” said Kristen Clarke, Assistant Attorney General of the Justice Department’s Civil Rights Division.