Feet of Clay

It appears that Warren Buffett’s mortgage companies aggressively redline, steering affordable mortgages away from black borrowers:

Trident Mortgage Co. helps more families buy homes in Philadelphia and neighboring Camden, New Jersey, than any other company, but it primarily serves one demographic: white people.

That is no coincidence: Trident employs a nearly all-white team of mortgage consultants, and all of Trident’s offices are in white neighborhoods, where it makes the overwhelming majority of its loans to white homebuyers.

It’s a division of Berkshire Hathaway Inc., the giant holding company led by Warren Buffett, which has dramatically expanded its mortgage brokerage portfolio in recent years, reporting nearly 28,000 loans worth $7.3 billion last year.

“I originally paid little attention to HomeServices,” Buffett wrote in his most recent shareholder letter, referring to Berkshire Hathaway’s real estate brokerage operation, HomeServices of America Inc., which controls Trident and two other mortgage companies. Then, he said, its “growth exploded.”

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But as they’ve become major players in cities across America, Berkshire Hathaway’s affiliated mortgage companies have followed a consistent pattern. Government lending data reviewed by Reveal from The Center for Investigative Reporting shows the companies direct their lending toward white borrowers and white neighborhoods, even in population centers such as Philadelphia where a majority of residents are people of color.

The analysis is part of Reveal’s ongoing coverage of modern-day redlining in America, which found 61 metro areas, from Jacksonville, Florida, to Tacoma, Washington, where people of color were significantly more likely to be denied a conventional home loan than their white counterparts. This was true even when people of color earned the same amount of money as white loan applicants, wanted to take on the same size loan or buy in the same neighborhood.

Reveal’s analysis found people of color were far more likely to be turned down for a loan in many of Berkshire Hathaway’s largest markets, including Philadelphia, Atlanta and Washington, D.C. It makes loans through three firms, Trident Mortgage, HomeServices Lending LLC and Prosperity Home Mortgage LLC. Here’s a breakdown:

  • In Philadelphia, Trident Mortgage made 1,721 conventional home purchase loans in 2015 and 2016, 47 of them to African Americans and 42 to Latinos.
  • In Atlanta, HomeServices Lending made 1,358 conventional home purchase loans, 63 to African Americans and 46 to Latinos.
  • In Washington, Prosperity Home Mortgage made 2,650 conventional home purchase loans, including 167 to African Americans and 144 to Latinos.


Legal experts said Berkshire Hathaway’s mortgage companies were carrying out the very practices outlawed by the Fair Housing Act, a 50-year-old law that banned racial discrimination in lending, by locating their branches in white neighborhoods, employing mortgage consultants who – from their websites – appear to be overwhelmingly white and lending mostly to white borrowers.

“It sounds to me like they are intentionally avoiding doing business with people of color,” said Allison Bethel, director of the fair housing clinic at the John Marshall Law School in Chicago.

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The analysis compared the racial breakdown of mortgage lending for every lender in every city in America. It showed Berkshire Hathaway’s mortgage companies took in a far greater proportion of their conventional loan applications from white homebuyers than their competitors in its largest markets in 2015 and 2016.

The figures were especially stark for Trident, which placed all of its 55 loan centers across Delaware, New Jersey and Pennsylvania in majority-white neighborhoods, Reveal’s analysis found. The analysis also showed 92 percent of the company’s conventional home loan applications came from borrowers in majority-white neighborhoods. When Trident did lend in neighborhoods where the majority of residents were people of color, most of the loans still went to whites.

Berkshire Hathaway’s mortgage business has the hallmarks of one that could be prosecuted for “failure to serve” under the Fair Housing Act, according to Eric Halperin, a former federal prosecutor who oversaw fair lending cases during President Barack Obama’s first term.

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The government lending data analyzed by Reveal also showed Trident served a much smaller and whiter section of the Philadelphia area than the region’s No. 2 lender, Wells Fargo, which overall took in a slightly smaller number of conventional home purchase applications. Trident made 26 times as many conventional loans to white homebuyers as black homebuyers in Philadelphia in 2015 and 2016, the data shows. For Wells Fargo, that ratio was 7 to 1.

It seems to me that Oracle of Omaha might have a blond blind spot when it comes to issues of people of color.

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