Consumer Bureau, DOJ take action in Philadelphia redlining case
The Consumer Financial Protection Bureau (CFPB) joined with the U.S. Department of Justice (DOJ) to enter a $22 million enforcement action against nonbank mortgage lender Trident Mortgage.
The CFPB and DOJ allege Trident redlined majority-minority neighborhoods in the greater Philadelphia area through its marketing, sales, and hiring actions. Specifically, Trident’s actions discouraged prospective applicants from applying for mortgage and refinance loans in the greater Philadelphia area’s majority-minority neighborhoods.
In a statement, the CFPB noted the harm done to impacted families due to Trident's illegal actions.
“Trident illegally redlined neighborhoods in the Philadelphia area, excluding qualified families seeking to own a home,” said CFPB Director Rohit Chopra. “With housing costs so high, it is critical that illegal discrimination does not put homeownership even further out of reach.”
The DOJ added that redlining is a real crime that carries devastating impacts.
“This settlement is a stark reminder that redlining is not a problem from a bygone era. 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 Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division.
The enforcement action requires Trident to:
- Pay $18.4 million into a loan subsidy program: To increase nondiscriminatory access to credit, Trident will establish a loan subsidy program. A lender it contracts with will offer loans to qualified applicants on a more affordable basis when borrowing to purchase properties in majority-minority neighborhoods in the Philadelphia MSA. The loan subsidies can include closing cost assistance, down payment assistance, and payment of mortgage insurance premiums. Through the lender it contracts with to make loans under the subsidy fund, Trident will ensure the lender has four offices located in majority-minority neighborhoods. These lending offices will provide similar services to those provided through Trident’s offices.
- Pay a $4 million fine: Trident will pay a $4 million penalty to the CFPB, which will be used for the CFPB’s victims’ relief fund.
- Pay an additional $2 million: Trident must spend $2 million to fund advertising to generate applications in redlined areas as well as to take other steps to serve the credit needs of majority-minority neighborhoods in the Philadelphia MSA.