(Bloomberg) -- Trident Mortgage Co., owned by Warren Buffett’s Berkshire Hathaway Inc., will pay more than $20 million over allegations that it discriminated against borrowers in the Philadelphia area in the US Justice Department’s first redlining resolution involving a nonbank lender.

As part of the resolution, Trident will have to contribute $18.4 million into a new subsidy program that will provide affordable loans for buyers of properties in Philadelphia neighborhoods where minorities make up most of the population. The lender also will pay $4 million toward a victims’ relief fund, and $2 million for marketing campaigns in redlined neighborhoods, the Justice Department and Consumer Financial Protection Bureau said in a statement Wednesday.

“Trident illegally redlined neighborhoods in the Philadelphia area, excluding qualified families seeking to own a home,” CFPB Director Rohit Chopra said in the statement. “With housing costs so high, it is critical that illegal discrimination does not put homeownership even further out of reach.”

Trident discriminated against people in minority neighborhoods through its marketing, sales and hiring practices, according to the CFPB and Justice Department. The firm’s employees also used racist language in emails, and the lender conducted direct-mail advertising campaigns that exclusively pictured individuals who appeared to be White, the government said.

Trident is a wholly owned subsidiary of Fox & Roach LP, which is owned by HomeServices of America Inc., part of Omaha, Nebraska-based Berkshire Hathaway. Trident stopped accepting mortgage applications last year, the CFPB said.

Trident didn’t admit any wrongdoing, HomeServices said in an emailed statement.

“We strongly disagree with the agencies’ interpretation of Trident’s prior lending practices. Trident and any affiliated companies have never denied or discouraged access to mortgage loans or other services based on race,” HomeServices said. Still, the firm is “committed to supporting additional lending that will help close the racial gap in homeownership.”

Marketing Investment

Attorneys general from Pennsylvania, Delaware and New Jersey, where Trident had operations, also reached agreements with Trident as well as with Fox & Roach, which will invest $150,000 in marketing to communities of color in the Philadelphia area.

The action against Trident is part of a Justice Department initiative launched in October to crack down on redlining. The department is ramping up its partnership with federal financial regulators and state attorneys general “to combat the modern-day redlining that has unlawfully plagued communities of color,” US Attorney General Merrick Garland said in a statement Wednesday.

Although the federal government has brought redlining actions against banks in the past -- such as in cases against Trustmark National Bank and Cadence Bank -- Wednesday’s resolution was the first involving a nonbank lender and the second-largest such settlement in the Justice Department’s history, it said. The settlement is subject to federal court approval.

“Along with our federal and state law enforcement partners, we are sending a powerful message to lenders that they will be held accountable when they run afoul of our fair lending laws,” Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said in the statement.

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