On May 29, 2014, Relman Colfax filed a groundbreaking redlining lawsuit in U.S. District Court for the District of Rhode Island on behalf of the City of Providence against Santander Bank, N.A. In the lawsuit, Providence alleged that, since 2009, Santander deliberately discriminated by refusing to make prime mortgage loans available in minority neighborhoods as required under the Fair Housing Act. Santander gained a substantial share of the city’s mortgage lending market in 2009 when it completed its purchase of Sovereign Bank.
The suit identified a “race gap” by comparing Santander’s increased lending in white neighborhoods since the takeover – up 25% – to its decreased lending in minority neighborhoods – down 63%. Santander’s dramatic race gap made it a clear outlier and stood in stark contrast to many of its peers, which performed far better in Providence and throughout New England. In support of the complaint, declarations from officials at three of the city’s leading community development corporations explained that Santander ignored the minority neighborhoods where these CDCs work to identify and educate qualified homebuyers.
Large-scale discriminatory lending mainly took the form of reverse redlining during the rise of subprime lending, when minority neighborhoods were targeted for predatory loans. But Providence faced a return to old-fashioned redlining with Santander intentionally disinvesting from minority neighborhoods starved for prime loans. The lack of adequate good credit prevented many in these neighborhoods from averting foreclosure, held down property values, and thwarted a broad economic recovery that a healthy housing market can help generate in every neighborhood. The harm to Providence and its citizens, and citizens of many other cities confronting a return to redlining, was tangible and substantial.
The case was ultimately dismissed by the City of Providence in exchange for commitments of $1.3 million in grants to support low- and moderate-income neighborhoods in the city.
City of Providence v. Santander Bank, N.A., No. 14-244 ML (D.R.I.)