Regulators have long scrutinized banks for fair lending compliance, and the penalties are growing larger. Case in point: Trident Mortgage Company, which agreed to a $22 million settlement with federal agencies in 2022 after it was found to have engaged in redlining and racist employee communications. The company also ignored warnings and failed to correct disparities.
If your company’s lending practices and workplace culture allow discriminatory behavior to go unchecked, then multimillion-dollar penalties, lawsuits, and irreparable reputational damage could follow.
The Growing Threat of Lending Violations
The Trident case, brought by the Consumer Financial Protection Bureau (CFPB) and Department of Justice (DOJ), exposed a raft of federal law violations that occurred in the Philadelphia area between 2015 and 2019, including:
Redlining on a massive scale: Despite operating in a metro area where 29% of neighborhoods were majority-minority, only 12% of Trident’s mortgage applications came from these areas — compared to 21.5% from peer lenders.
Overwhelming racial disparity in home loans: In neighborhoods where more than 80% of residents were minorities, and fewer than 20% were white, 51% of Trident’s loan applicants were white.
Marketing that effectively shut out minorities: 92% of Trident’s direct mail campaigns targeted majority-white areas. Their online property listings were 87.5% concentrated in white neighborhoods, yet all of their marketing materials featured only white individuals.
Racist emails and jokes from employees:
A Trident loan officer mocked a potential applicant, writing:“This one is in the ghetto. pass [sic] it along to Ian. HAHAHAHAHHA kidding.”
Another loan officer called a property’s location “upper ghetto blocked off bad area”.
Employees circulated racist emails, including one stating:“BE PROUD TO BE WHITE!”
Staff shared an image of a fake credit card offer promising a "Free Watermelon" as a sign-up bonus.
Another email contained a liquor store sign that read: "SORRY—CLOSED A N*** ROBBED US… AGAIN."**
Fair Lending Risks You Can’t Ignore
Trident’s case is a wake-up call for compliance leaders in banking and mortgage lending. What specific risks should your company monitor?
Redlining and lending discrimination: If your loan officers or branches systematically exclude certain neighborhoods, regulators will take action.
Marketing and hiring practices: If your company’s advertising only features white families, is heavily concentrated in certain communities, or your loan officers aren’t serving diverse areas, you could face scrutiny.
AI Communication Monitoring Is Part of the Solution
The racist emails traded by Trident employees showed the problem was deeper than just a few bad actors — it was evidence that Trident allowed a culture in which employees felt comfortable making openly racist remarks over company email. If they were this brazen about the small things, it’s not a stretch to see why they were biased about bigger ones.
HarmCheck’s AI-driven language analysis can detect problematic language in emails in real-time. This allows banks to identify risks before they spiral into a public scandal or regulatory action.
The Cost of Inaction Is Too High
Trident’s $22 million penalty is reflective of a long-term problem in the lending industry. The only way to stay ahead is with proactive monitoring that catches problems before they escalate. Is your loan office ready for scrutiny? Let HarmCheck help you prevent discrimination before it costs you millions.
Amanda Nurse is the editorial and operations coordinator at Alphy.
HarmCheck by Alphy is an AI communication compliance solution that detects and flags language that is harmful, unlawful, and unethical in digital communication. Alphy was founded to reduce the risk of litigation from harmful and discriminatory communication while helping employees communicate more effectively. For more information: www.harmcheck.ai