PROVIDENCE, R.I. (WPRI) – Lawyers for Rhode Island’s capital city filed suit on Thursday against Santander Bank accusing the company of intentionally refusing to offer mortgages in minority neighborhoods across Providence.
The 88-page federal lawsuit seeks to recoup “millions of dollars” the city believes would cover lost tax revenue along with the costs associated with maintaining vacant homes and public safety rescue calls made to blighted neighborhoods, according to John Relman, an attorney representing the city.
“By ignoring these neighborhoods and targeting growth in white areas, Santander not only stands in violation of fair lending laws, but it is causing tangible harm to the city as a whole and the underserved communities that are starved for good loans,” Relman said.
- PDF: Read the lawsuit
In the suit, the city alleges that Santander’s mortgage applications and originations in minority communities have declined by 60% while increasing in white communities since 2009, when Banco Santander purchased Sovereign Bank.
“We categorically reject this accusation and will vigorously defend ourselves against the legal action,” a spokesperson for the bank said in a statement. “However, we are willing to work with the City of Providence to allay its concerns. Santander is proud to actively support the communities in which it operates. In Providence, this support comes through our lending, our alliances with three universities in the area, our work with more than a dozen local charities and the more than 800 people we employ there.”
The city is accusing Santander of a practice known as redlining, which involves companies deliberately refusing to offer services in certain neighborhoods. Relman’s firm has previously been involved in a lawsuit accusing Wells Fargo of targeting minority communities in Baltimore and Memphis for subprime loans, a practice referred to as reverse redlining. The bank ultimately settled for $175 million.
Providence Mayor Angel Taveras, a Democrat who is running for governor, said Santander’s practices “violate fair lending laws and hurt Providence families.” Before becoming mayor, Taveras served as a Housing Court judge for the city and said he watched how some city neighborhoods were devastated during the national housing crisis.
“Many borrowers in minority neighborhoods are qualified for prime loans, but Santander has written them off,” Taveras said. “That holds down property values and the broad economic recovery that a healthy housing market can help generate in every neighborhood in Providence.”
The lawsuit is the latest in a series of “affirmative litigation” efforts the city has been involved in since 2012, according to Jeff Padwa, Providence’s city solicitor. In April, the city filed suit against Bank of America and the New York Stock Exchange over high-frequency trading.