PROVIDENCE – The city has filed a federal lawsuit against Santander Bank alleging that the financial institution discriminated against the city’s minority communities by refusing to make prime mortgage loans as required by the Fair Housing Act, according to a press release from Mayor Angel Taveras.
“Santander’s practices violate fair lending laws and hurt Providence families,” said Taveras, who held a press conference to announce the lawsuit Thursday morning. “Many borrowers in minority neighborhoods are qualified for prime loans, but Santander has written them off. 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, City of Providence v. Santander Bank, N.A., was filed Thursday in U.S. District Court for Rhode Island against the bank’s U.S. operations.
“We are not suing the parent company,” Glenn Schlactus, an attorney with the firm of Relman, Dane & Colfax PLLC, told Providence Business News.
The parent company, Banco Santander SA, is based in Madrid.
The lawsuit alleges that since 2009, Santander has deliberately reduced its lending in minority neighborhoods in Providence, while actively expanding its business in predominantly white neighborhoods. Santander acquired Sovereign Bank in 2009 and with that acquisition gained a substantial share of the city’s mortgage lending market, according to the information from Taveras.
“We categorically reject this accusation and will vigorously defend ourselves against the legal action,” said Mary Ellen Higgins, a spokeswoman for Santander. “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.”
Attorneys for the city said the Providence lawsuit could have implications beyond Rhode Island.
“Santander’s practice, commonly known as redlining, violates two federal laws – the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit discriminatory lending,” said City Solicitor Jeffrey Padwa, who initiated the investigation into discriminatory lending practices.
“Prime loans are in short supply in Providence’s minority communities,” said John Relman of Relman, Dane & Colfax, a Washington, D.C.-based law firm retained by Padwa to represent 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 added. “If you look at Santander’s lending, not only in Providence but in much of New England, the data is stark and powerful – and indicates that Providence is merely the tip of the iceberg.”
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