On July 27, 2022, the Consumer Financial Protection Bureau (CFPB) and the United States Department of Justice (DOJ) filed a lawsuit in the United States District Court for the Eastern District of Pennsylvania against Trident Mortgage Company LP for alleged discrimination against minority families. in the greater Philadelphia area.
According to the CFPB press release, the draft order contained in the complaint, if taken to court, would be the CFPB’s first resolution with a non-bank mortgage lender and would require Trident to pay $18.4 million. in a loan subsidy program to increase non-discriminatory access to credit; pay a civil penalty of $4 million to the CFPB victim relief fund; and pay an additional $2 million to take the necessary steps to meet the credit needs of majority minority neighborhoods.
In the complaint, the CFPB and DOJ alleged violations of the Equal Credit Opportunity Act, the Consumer Financial Protection Act, and the Fair Housing Act by Trident. Specifically, the complaint alleges that from 2015 to 2019, Trident engaged in a pattern or practice of unlawful discrimination against candidates and potential candidates on the basis of race, color, or national origin. , in particular by redoubling the majority minority neighborhoods of Philadelphia.
Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area (MSA) and engage in acts and practices designed to discourage potential applicants from applying for credit.
The complaint alleged the following discriminatory acts and practices:
- Failure to market to majority-minority neighborhoods
Trident reportedly kept nearly all of its offices and loan officers in majority-white neighborhoods and avoided having offices in — or having loan officers serving — majority-minority areas. Specifically, Trident operated 53 offices, 51 of which were in predominantly white neighborhoods. According to the CFPB and DOJ, by concentrating nearly all of its offices in majority-white areas, Trident discouraged residents of majority-minority areas from applying for and obtaining home loans. The CFPB and DOJ also allege that Trident failed to take steps that would compensate for its lack of offices in majority-minority areas, including its failure to assign loan officers to solicit applications in majority-minority communities. Further, with respect to marketing materials, the CFPB and DOJ allege that the use of all white-looking models and images of all white mortgage officers on Trident’s marketing materials discouraged residents of majority and strong minority neighborhoods to apply for a loan from Trident. .
- Exchange by staff of racist or discriminatory e-mails and photos
From 2015 to 2019, Trident loan staff allegedly sent and received emails containing racial slurs and racist content. According to the complaint, loan officers or other Trident employees referred to properties in majority-minority areas as being in the “ghetto” and circulated several emails containing racial slurs and derogatory content. specifically related to locations and valuations of real estate properties.
- Disproportionately low number of home loan applications from majority minority and high minority neighborhoods
The CFPB and DOJ also relied on the HMDA data. According to the complaint, HMDA data confirms that Trident avoided serving majority-minority neighborhoods and high-minority neighborhoods in Philadelphia’s MSA. HMDA data revealed that Trident significantly underperformed its “peer lenders” in generating home loan applications in the majority minority neighborhoods of Philadelphia’s MSA. Along the same lines, HMDA data revealed that Trident significantly underperformed its lender peers when it comes to home loans in the majority-minority neighborhoods of Philadelphia’s MSA.
Overall, the complaint details Trident’s actions of highlighting majority-minority neighborhoods in the Philadelphia MSA and actively discouraging applications from individuals in those majority-minority neighborhoods. In response, Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said, “Trident’s illegal redlining activity has deprived communities of color of equal access to residential mortgages, deprived them the opportunity to create wealth and devalue properties in their neighborhoods.
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The Trident Complaint Demonstrates the Importance of Ensuring Your Fair Lending and Fair Housing Efforts Cover all aspects of your operation – from hiring and marketing to origination and service. According to the CFPB and DOJ, Trident engaged in an ancient form of housing discrimination (i.e. redlining) using “modern” methods that affected all aspects of the lender’s operations. The CFPB has made it clear that the Fair Lending and Fair Housing Act applies to all phases of a mortgage lender’s business. As such, industry members should ensure that their fair lending reviews are broad enough to reflect the Bureau’s expectations.