Settlement with Trident Mortgage Co LP and Fox & Roach LP over Allegations of Race-Based ‘Redlining’
Earlier this week NJ Attorney General announced that New Jersey has entered into a historic settlement agreement with the former home mortgage lender Trident Mortgage Company LP and the real estate brokerage Fox & Roach LP after they illegally engaged in racially discriminatory “redlining” in their lending practices.
The settlement provides more than $20 million in loan subsidies and other relief to resolve these allegations of racial discrimination in New Jersey, Pennsylvania, and Delaware.
The settlement requires Trident to create an $18.4-million fund to provide individual subsidies of up to $10,000 per qualified applicant in support of home purchases, refinance, and home improvement loans for owner-occupied homes in largely minority neighborhoods.
Trident is also required to spend an additional…
- $875,000 on targeted advertising and public outreach to generate awareness of the loan subsidy fund.
- $375,000 to fund consumer financial education
- $750,000 to start a Community Development Partnership Program, which will fund collaborations with local community-based or governmental organizations to help extend credit to qualified borrowers.
The settlement announced this week is the result of a four-year investigation of Trident and its former real-estate affiliate, Fox & Roach.
The investigation was initiated by the PA Attorney General's Office and subsequently joined by the Attorney General's office in NJ and Delaware.
These State inquiries ran parallel to federal investigations of Trident by the Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Justice (US DOJ).
The dual investigations found that Trident, one of Camden’s top mortgage lenders until it ceased its mortgage lending business in December 2020, engaged in redlining in Camden, Burlington, and Gloucester counties in New Jersey.
Specifically, Trident avoided providing credit services in minority neighborhoods because of the race or national origin of the people who lived there, thereby deterring Black and brown borrowers in these locations from obtaining loans.
“Redlining” is a term that goes back decades. It initially described the federal government’s practice, in the 1930s, of outlining areas with a large Black population, regardless of their socio-economic status, as risky, cutting off people in majority Black neighborhoods from increased investment and economic growth.
Today, “Redlining” refers to a practice by which banks and mortgage lenders systematically underserve and discriminate against neighborhoods with high percentages of minority residents. These practices deprive such areas and their residents of adequate credit. The lack of competition also makes residents of redlined neighborhoods vulnerable to unscrupulous, predatory lending.
It is estimated that the $18.4 million loan subsidy program created by this settlement could spur hundreds of millions of dollars in total lending in the Camden-Philadelphia-Wilmington region, which spans Burlington, Camden, and Gloucester counties in New Jersey as well as portions of Pennsylvania and Delaware.
In the coming months, Trident will assess the credit needs of majority-minority neighborhoods across the Camden-Philadelphia-Wilmington area. Based on that assessment, Trident may use the fund to subsidize mortgages with reduced interest rates, down payment assistance, closing cost assistance, payment of the initial mortgage insurance premium, and possibly other means with approval.
In addition to the loan subsidy fund, Trident has also agreed to pay $250,000 in costs to the New Jersey Division on Civil Rights, which prioritized the multi-year investigation to remedy the harm done to majority-minority communities. Trident must also ensure that four new branch locations are opened in majority-minority neighborhoods, including one within the Camden area.
The agreement also requires Trident’s former real estate affiliate Fox & Roach to assist Trident in facilitating increased access to residential mortgages. Fox & Roach and Trident shared a close business relationship, including some co-located offices. As a result, Fox & Roach customers made up a large majority of Trident’s mortgage lending business.
Under the agreement, Fox & Roach is required to create a $150,000 fund to conduct targeted marketing to qualified applicants seeking loans for primary homes in the majority-minority neighborhoods that were previously underserved by the company.
Today’s agreement also prohibits Trident and Fox & Roach from engaging in any practice that constitutes redlining. Moreover, it requires outreach and equally attentive customer service to residents of the region’s race-based majority-minority neighborhoods, compliance monitoring during the term of the settlement, and anti-bias training.
Although Trident ceased its mortgage lending business in December 2020, the company will continue operations to implement the settlement over its five-year term, including by facilitating the administration of the loan subsidy fund.
HomeServices of America, Inc., a corporate parent of both Trident and Fox & Roach, has guaranteed compliance with the agreement.
Trident’s settlement with New Jersey is in the form of an Assurance of Voluntary Compliance. The federal agencies have entered into a Consent Order with Trident, filed in the U.S. District Court for the Eastern District of Pennsylvania.