Already in hot water for lending practices, outlets of Santander Bank have recently come under fire for racial and economic discrimination, with government data and an analysis by an industry reform group revealing the bank has “denied mortgages to women, minorities and low-income borrowers in the U.S. Northeast more frequently than nearby banks.” The discrimination was discovered when the Committee for Better Banks, “a coalition of bank workers, consumer advocacy groups and unions” researched government data “on home loans in the U.S. Northeast, including nearly 10,000 Santander home-purchase applications.” What they found was “a disturbing pattern of racial and economic discrimination.”
Already in hot water for lending practices, outlets of Santander Bank have recently come under fire for racial and economic discrimination, with government data and an analysis by an industry reform group revealing the bank has “denied mortgages to women, minorities and low-income borrowers in the U.S. Northeast more frequently than nearby banks.” The discrimination was discovered when the Committee for Better Banks, “a coalition of bank workers, consumer advocacy groups and unions” researched government data “on home loans in the U.S. Northeast, including nearly 10,000 Santander home-purchase applications.” What they found was “a disturbing pattern of racial and economic discrimination.”
So what did the disturbing pattern look like? Well, according to the analysis, “Santander denied more than 26 percent of borrowers of color a mortgage in 2014 when other banks in the same locations only turned down 17 percent in aggregate.” The analysis also found that the bank “refused loans to 30 percent of low-income applicants, compared to the aggregate rate of 18 percent, and 20 percent of women, compared to the aggregate rate of 13.6 percent.” On top of that, in 2015 the bank “rejected more than three people of color for every white borrower it turned down.”
Where exactly is the discrimination occurring, though? Is it nationwide? So far the analysis found four areas where most of Santander’s discrimination is or has taken place. The areas include:
- Philadelphia, Pennsylvania
- Worcester, Massachusetts
- Hartford, Connecticut
- Camden, New Jersey
In terms of how bad the discrimination is in certain areas, let’s look at Philadelphia. In Philadelphia’s low-income neighborhood, “Santander’s mortgage denial rate was 36.6 percent in 2015, more than twice the aggregate rate in that market.” Hartford wasn’t much better in that same year, denying “at least four Latino borrowers for every white one.”
Claims of discrimination against the bank aren’t new, though. Back in 2014, they settled a suit with Providence, Rhode Island, “over alleged redlining, a practice in which a bank limits lending in minority neighborhoods while increasing it in predominantly white ones.”
Despite the government data and recent analysis, Santander has denied the accuracy of the reports. One Santander spokesperson even said, “the bank has serious questions about its accuracy.” According to Ann Davis of Santander, “the main data source, disclosures that lenders file under the Home Mortgage Disclosure Act (HMDA), does not reflect many important factors that all financial institutions consider when reviewing loan applications, including the borrower’s amount of debt and credit history.” What is the HDMA? Simply put, it was a law passed back in 1975 “to shine a light on qualified borrowers who could not get loans because of where they lived.”
In any case, it’s never a good thing to be any type of business known for discriminatory practices. It will be interesting to see if other lawsuits are brought against the bank in the next couple of years.
Sources:
Santander U.S. Mortgage Data Shows Racial, Economic Discrimination: Group
US Mortgage Data Shows Racial, Economic Discrimination By Santander Bank: Group
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