The news: The Consumer Financial Protection Bureau (CFPB) used troubling internal employee emails at Trident Mortgage to nail down proof of redlining, per American Banker.
What happened? Last month, Trident Mortgage paid $24 million to settle charges it faced after a CFPB probe revealed that it avoided initiating home loans in the metropolitan areas of Philadelphia, Pennsylvania, Camden, New Jersey, and Wilmington, Delaware. The regulator requested copies of employee emails, which it used as proof of intent for avoiding the loans. That proof included:
- Photos of a senior loan officer standing with junior loan officers in front of a Confederate flag.
- Loan officer emails passed around with the text, “Proud to be White.”
- Mortgage officers sending racist images and racial slurs while referencing certain Philadelphia neighborhoods.
The CFPB found that Trident extended significantly fewer loans than its competitors between 2015 and 2019, originating 12% of home loans in mostly-minority populated areas compared to 21.5% by competitors in the same areas. And the emails reviewed by the CFPB led the agency to identify motive and intent behind the disproportionate lending.
As part of the settlement, Trident will hire a third-party credit needs assessment consultant in the next month. Trident denied that any discrimination had occurred.
Where’s the training and awareness? Mortgage providers typically use software to ensure compliance with fair lending practices, as well as internal auditing and quality reviews to identify violations. But it’s nearly impossible to regulate each individual employee’s biases.
That leads to questions around diversity training and awareness, and how that could be lacking at a major mortgage lender.
- Diversity, equity, and inclusion (DE&I) has grown to become a major focus of banks and financial institutions, with many large banks such as Bank of America, JPMorgan, and Citi hiring DE&I executives and instituting DE&I arms within Human Resources.
- The American Bankers Association offers resources to help firms develop their DE&I leadership and proficiencies.
- Affinity banks are taking the industry by storm. Banks like Guava, Totem, Daylight, and Seis are creating communities for black business owners, Native Americans, members of the LGBTQ+ community, and the Spanish-speaking population to share financial experiences and knowledge.