According to the Department of Justice, billionaire Warren Buffett’s mortgage company discriminated against Black homebuyers.
Pennsylvania-based Berkshire Hathaway and Trident Mortgage Co., a division of Berkshire’s HomeServices of America, have now reached an agreement with the Consumer Financial Protection Bureau (CFPB) to set aside $20 million to make loans in underserved neighborhoods as part of the settlement. The settlement is being called the second-largest redlining settlement in history, the Associated Press reported.
The largest redlining settlement was in 2015, when Associated Bank was required to provide approximately $200 million in mortgage loans to borrowers in minority neighborhoods as part of a settlement with the U.S. Department of Housing and Urban Development over charges of discriminatory lending.
Redlining is a term used to describe when banks deliberately avoid making loans to non-white communities. Redlining cut off entire communities from homeownership, which is the primary pathway for wealth generation in the U.S., ABC News reported. Today, Black homeownership, at 43.4 percent, is lower than it was a decade ago.
The government said that Berkshire Hathaway discriminated against potential Black homebuyers in Philadelphia, New Jersey, and Delaware. The DOJ, the US attorney in the eastern district of Pennsylvania, and the CFPB said in a complaint that between 2015 and 2019, Trident violated federal civil rights law by “avoiding providing home loans and other mortgage services to majority-minority neighborhoods.” The minority-majority neighborhoods in West Philadelphia, included Malcolm X Park; Camden, New Jersey; and in Wilmington, Delaware.
The DOJ conducted the investigation with the CFPB as part of its Combating Redlining Initiative, The Guardian reported. “Trident illegally redlined neighborhoods in the Philadelphia area, excluding qualified families seeking to own a home,” said the CFPB director, Rohit Chopra.
“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, an assistant Attorney General of the Justice Department’s Civil Rights Division, in a prepared statement.
Photo: In this May 5, 2019, file photo Warren Buffett, Chairman and CEO of Berkshire Hathaway, speaks during a game of bridge following the annual Berkshire Hathaway shareholders meeting in Omaha, Neb. (AP Photo/Nati Harnik, File)