Providence, R.I., Files Lawsuit Against Banco Santander

The city of Providence, R.I., on Thursday filed a federal lawsuit against the U.S. unit of Banco Santander SA, accusing the Spanish bank of discriminatory lending practices.

The city, which filed the lawsuit in the U.S. District Court for the District of Rhode Island, alleges that the bank has reduced its lending in Providence's minority neighborhoods and increased it in mostly white neighborhoods. The city says the bank's allegedly discriminatory policies have violated the Fair Housing Act and the Equal Credit Opportunity Act.

The lawsuit alleges that mortgage applications and originations have declined in minority neighborhoods. The decline is "due to redlining and is a substantial obstacle to minority participation in the housing market recovery," the lawsuit alleges.

"Santander's practices violate fair lending laws and hurt Providence families," Providence Mayor Angel Taveras said in a statement. "Many borrowers in minority neighborhoods are qualified for prime loans, but Santander has written them off."

A spokesman for Santander couldn't immediately be reached to comment.

Santander gained a foothold in the city's mortgage market in 2009 when it completed a deal to buy the rest of Philadelphia lender Sovereign Bank it didn't already own.

Santander isn't the only bank being targeted by U.S. cities. A federal judge on Wednesday said a lawsuit filed by the city of Los Angeles against Wells Fargo & Co. for allegedly predatory lending practices could continue.

"The court's decision to allow the City Attorney's lawsuit to proceed, while disappointing, in no way suggests that the claims ultimately will prevail," a spokesman for Wells Fargo said in an email. "We are prepared to defend our record as a responsible lender as well as our long-standing efforts to work with customers, credit counselors, non-profit organizations and government agencies to expand homeownership and revitalize distressed neighborhoods in Los Angeles."

Write to Julie Steinberg at [e-mail]

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