PROVIDENCE, R.I. (WPRI) – Six months after the city of Providence accused Santander bank of intentionally refusing to offer mortgages in minority neighborhoods, the bank said Thursday it will provide at least $24 million in home loans for low- and moderate-income city residents over the next three years.
Santander’s announcement came after the city agreed to drop a lawsuit against the bank in exchange for the bank providing $1.3 million in grants to several Providence-based nonprofits.
“As a native of Providence I am delighted to represent Santander as we continue to build our relationship with the city of Providence in this way,” Mike Lee, managing director of commercial banking for Santander, said in a statement. “At Santander, we are committed to our communities and their progress. Setting this goal for mortgage lending to low- and moderate-income customers is just one way we can support this vibrant city.”
Lawyers representing the city filed an 88-page federal lawsuit against the bank in May in an attempt to recoup “millions of dollars” they said would cover lost tax revenue along with the costs associated with maintaining vacant homes and public safety rescue calls made to blighted neighborhoods.
The city accused Santander of a practice known as redlining, which involves companies deliberately refusing to offer services in certain neighborhoods. Providence hired lawyer John Relman has to handle the suit. His firm was previously 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.
In the suit, the city alleged 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.
“Owning a home has long been part of the American dream; we’re excited about this program and what it will mean in helping to turn that dream into a reality for prospective low-and moderate-income homebuyers in our city,” Mayor Angel Taveras said in a prepared statement. “This is an important investment in our community and in the relationship between Santander and the city of Providence, which will benefit residents for years to come.”
The lawsuit was 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. Those lawsuits are ongoing.