By Stephone Coward
- Warren Buffet’s Trident Mortgage company discriminated against Black and Latino homebuyers in three states, according to the DOJ
- 45% of Black families own their homes, with a median home value of $150,000
Billionaire investor and philanthropist Warren Buffett, who in 2010 received a Medal of Freedom from Former President Obama, has a bad apple of a company that could spoil his barrel of good. The Department of Justice (DOJ) claims Buffet’s Trident Mortgage company engaged in redlining, by deliberately avoiding writing mortgages in predominantly minority neighborhoods in West Philadelphia, Camden, New Jersey, and Wilmington, Delaware.
Why This Matters: Buffett’s mortgage company joins a legacy of financial institutions who have caused economic harm to Black communities by denying access to an important wealth building tool. “The key to the net worth of most Americans isn’t in a stock portfolio but the equity accumulated in their homes. It’s this equity that has created generational wealth for many White Americans” said Michelle Singletary to the Washington Post.
The once legal practice of redlining has crippled the economic advancement of Black and brown families for decades. Real Estate has long been a vehicle to pass down wealth and is a key reason why the racial wealth gap is so large.
Redlining’s legacy can clearly be seen in the current state of Black homeownership in the U.S. The 2019 Federal Reserve Survey of Consumer Finances shows that 45% of Black families own their homes, with a median home value of $150,000. That compares with a 73.7% homeownership rate for White families, with a median home value of $230,000.
The DOJ thinks this could be the second-largest redlining settlement in U.S. history. While that is welcomed news, the true cost of government created redlining can only begin to be paid in the form of reparations which Congress and the Executive branch of the government have lacked the courage to take on.
What’s Next: In July, the DOJ and the Consumer Financial Protection Bureau reached a settlement with Trident in which it will set aside $20 million for loans in underserved neighborhoods. Going forward, Buffet’s company will also hire mortgage loan officers in impacted neighborhoods, and pay a $4 million fine.
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