The city of Providence, R.I., plans to sue Santander Bank for deliberately shutting off home lending in mostly minority neighborhoods.
The lawsuit contends that after Banco Santander of Spain acquired Sovereign Bank in 2009, mortgage underwriting in white areas increased but declined in minority neighborhoods at a much larger degree than its peers. It claims that between 2009 and 2012, the number of new home loans in white neighborhoods was 25 percent higher per year than in 2006 and 2007; while the number of new mortgages in minority neighborhoods shrank by 63 percent.
The city is claiming damages from the costs associated with blight and abandoned homes in minority neighborhoods and a loss of tax revenue due to the lack of investment in those communities. "The attitude is, if we can't do subprime loans, predatory loans in the black community, we won't do any loans at all," said John P. Relman, lead attorney for the case. "For us it is a civil rights issue."