On Thursday Providence sued SantanderrnBank NA accusing it of discriminating against the city’s black and Hispanicrnresidents in the granting of mortgages while marketing aggressively to whiternborrowers.  The suit said that the bankrnis similarly curtaining lending to minorities in other New England localitiesrnincluding Boston.</p

Providence Mayor Angel Taveras saidrnin a statement that since 2009 (when it bought the former Sovereign Bank),rnSantander had deliberately reduced its lending in the city’s minority neighborhoodsrnwhile actively expanding its business in areas that were predominantly white. Thernlawsuit, filed in the United States District Court for the District of RhodernIsland, also alleges that Santander performance stands in stark contrast tornmany of its peer banks, who have performed far better in minority neighborhoods.</p

“Santander’s practices violaternfair lending laws and hurt Providence families,” Taveras said. “Manyrnborrowers in minority neighborhoods are qualified for prime loans, butrnSantander has written them off. That holds down property values and the broadrneconomic recovery that a healthy housing market can help generate in everyrnneighborhood in Providence.”</p

Over the past 18 months the CityrnSolicitor Jeffrey Padwa has led an investigation comparing lending inrnpredominant minority and while neighborhoods both before and after Santander acquiredrnSovereign.  The city maintains that thernbank’s average annual mortgage originations have increased substantially overrnthis period in white neighborhoods but declined precipitously in minorityrnneighborhoods. Specifically, they say that, while applications for mortgagesrnhave declined across the board due to economic conditions, applications to the Santanderrnfor prime loans from minority neighborhoods declined by 61 percent compared torna 37 percent decline in applications to other leading banks.  Providence found the same pattern whenrnanalyzing data for the combined metropolitan statistical area that includesrnBoston, Providence, and much of the remainder of New England.  There originations in minority neighborhoods droppedrn7 percent for other major banks after 2009 but 34 percent for Santander. </p

In its suit the City of Providencernalleges that the stark contrast in Santander’s mortgage lending activityrnbetween white and minority neighborhoods is the result of a deliberate decisionrnto engage in redlining and supports its contention with declarations fromrnofficials at three of the city’s community development corporations. </p

Santander Bank spokesman Mary Ellen Higgins said the bank categoricallyrnrejects the city’s accusations and intends to defend themselves against thernlegal action.  “However, we are willingrnto work with the City of Providence to allay its concerns,” she said.</p

Santander may be the biggest bank of which no one has ever heard.  The U.S. bank, headquartered in Boston, is a subsidiaryrnof Spanish bank Banco Santander, S.A which claims to be one of the largestrnbanks in the world with 102 million customers, 14,500 branches and 190,000rnemployees.   The Santander group of banksrnwas founded in 1857 and has a presence in the United Kingdom, Latin America andrnEurope.</p

Providence is seeking “millions in damages” and Taveras said he hopes thernsuit will encourage the government to step up enforcement against redlining.

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