Trident Mortgage Company, one of the largest mortgage lenders affiliated with a relator in the United States, has agreed to settle federal charges alleging that its lending practices were intentionally discriminatory. The discriminatory practices mostly harmed minorities in the Philadelphia area, and are akin to the age-old issue of redlining. The United States Department of Justice (DOJ) launched an initiative in 2021 designed to hamper the efforts of lending companies from their practice of redlining – redlining is a type of discrimination in which banks refuse to give mortgage loans to certain individuals because of their race or national origin.
In July of 2022, the DOJ sued Trident for its illegal lending practices, citing that the company’s offices were located in mainly white areas and that Trident’s officers served mainly white neighborhoods, but not minority neighborhoods. Additionally, the DOJ alleged in their complaint that “Trident had a disproportionately low number of home loans in majority-minority communities [and] Trident’s lending staff exchanged racist emails and photos.” Trident’s discriminatory actions implicate not only the Fair Housing Act (FHA), but also the Equal Credit Opportunity Act (ECOA) and the Consumer Financial Protection Act. All of these acts serve to protect vulnerable populations from the discrimination they have historically endured when they are seeking to finance a home.
Trident has agreed to pay a large sum that will fund a loan subsidiary program to increase the credit of the minorities in Philadelphia it is accused of discriminating against. Additionally, the company received a nondiscrimination injunction that will prevent any further acts of redlining by Trident. The settlement agreement also mandates that Trident get “independent third-party credit needs-assessment consultants with specialized experience in nondiscriminatory access to credit to assess the needs of majority-minority areas of Philadelphia and report on these findings.” Trident must also fund an outreach campaign and target advertising for a financial education program.
Though lending discrimination can be devastating to both individuals as well as whole neighborhoods and communities, this settlement agreement stands to offer the minority communities of Philadelphia with the boost they deserve. Monetary sanctions both allow for the community to get some of the services they deserve, as well as tend to be some of the most effective forms of punishment on large profit-drive companies. This settlement is an example of how seriously the DOJ regards discriminatory lending practices such as redlining, and hopefully it will serve to deter other lenders from engaging in such behavior.
Sources:
Kettering, Lou. “Berkshire Hathaway subsidiary to pay over $20M to settle redlining lawsuit” Jurist.org, JURIST Legal News & Research Services, Inc., JULY 27, 2022 10:38:26 PM. Date accessed: September 27, 2022
Gillett, M. Tyler. “US Justice Department announces initiative to combat discriminatory redlining practices” Jurist.org, JURIST Legal News & Research Services, Inc., OCTOBER 23, 2021 12:21:34 PM. Date accessed: September 27, 2022