After redlining settlement, Trident Mortgage launches loan-subsidy fund

An $18.4 million mortgage-subsidy fund resulting from the 2022 Trident Mortgage redlining settlement is now open to eligible borrowers in three Eastern states.

After a combined state and federal investigation last year found Trident — one of the largest mortgage lenders in the Philadelphia area before it ceased originations in 2020 — had regularly engaged in practices to discourage minority borrowing, the now-defunct company agreed to establish the fund under conditions of the settlement. The fund will support Black borrowers and majority-minority neighborhoods in a region that includes parts of Pennsylvania, New Jersey and Delaware. 

"This subsidy program will make a difference to many hundreds, possibly thousands, of families impacted by historic redlining practices in Philadelphia," said Pennsylvania Attorney General Michelle Henry in a press release. 

The fund, called Pathway to Prosperity, includes two different programs — HomeAssist and HomeAccess — which will provide as much as $10,000 in financial assistance per qualifying mortgage. The rollout comes after Trident conducted a study to determine the needs of majority-minority communities in the Philadelphia area. Trident is contracting with nonbank lender Prosperity Home Mortgage to administer the fund. 

HomeAssist will provide funding for the purchase or refinance of a primary residence located in a qualifying census tract. HomeAccess, meanwhile, is aimed at assisting current residents living in eligible neighborhoods to purchase a primary residence located in any state Prosperity is licensed. 

"For too long, companies have avoided offering mortgages in neighborhoods that are home to predominantly people of color, denying them equal access to mortgage credit. This is one small step toward correcting that injustice," Henry said.

Per the settlement, Trident will also provide consumer financial education and engage in community development partnerships within affected communities. Prosperity will open offices in some minority neighborhoods as well. 

Although no longer conducting business as a home lender, Trident had agreed to continue operations to implement terms of the settlement. Both Trident and Prosperity are mortgage subsidiaries of Berkshire Hathaway-owned HomeServices of America, a consortium of companies serving real estate interests. 

Following a four-year investigation, Trident was fined a total of $24.4 million, which included a penalty of $4 million owed to the Consumer Financial Protection Bureau for various violations. Among the investigation's findings were derogatory language, including racial slurs, used in emails between Trident staff, and marketing campaigns that excluded minority consumers. More than half the population of Philadelphia is Black or Hispanic.

Attorneys general of the three affected states participated in the investigation, along with the CFPB and the U.S. Justice Department. All voiced approval of Trident's program.

"The launch of this important loan subsidy fund marks a critical step in our efforts to redress Trident Mortgage Co.'s mortgage redlining practices, and to begin the process of making whole the communities that have been harmed by generations of systemic housing discrimination," said New Jersey Attorney General Matthew J. Platkin.

"It will take generations to truly repair that harm — but this subsidy program will make a real, tangible difference for hundreds of redlining's victims," added Delaware Attorney General Kathy Jennings. 

Redlining, defined as a systematic practice of underserving or discriminating against predominantly Black, Hispanic or other ethnic neighborhoods, has been prohibited since the 1960s with the enactment of the Fair Housing Act. But violations continue decades later, with multiple financial institutions this year involved in redlining lawsuits. 

This past spring, Pennsylvania-based Essa Bank and Trust was also fined $3 million for purported infractions in the Philadelphia area. And in January, City National Bank of Los Angeles resolved allegations against it by agreeing to pay more than $31 million, the largest redlining settlement in history. Allegations have similarly hit the likes of KeyBank and HSBC in 2023.