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Question: Is it true New York amended its Community Reinvestment Act (CRA) to cover non-bank mortgage lenders, and if so, what does this mean?

Answer: 

Yes, effective November 1, 2022, New York amended its Community Reinvestment Act (CRA) to cover non-bank mortgage lenders licensed as Mortgage Bankers in NY.  NY’s Department of Financial Services (DFS) explained that “[t]he CRA is a law intended to encourage covered institutions to meet the credit needs of their whole communities including through the [DFS’s] evaluation of their lending activities.”  

The amendment requires that DFS take into consideration and assess the record of performance of the mortgage lender in helping to meet the needs of its entire community, including low and moderate-income neighborhoods, whenever it reviews a license application, change of control, or any other application or notice the Superintendent determines to be applicable. 

In completing the assessment, DFS will consider the mortgage lender’s:

• VOOR filing data; 
• Activities conducted to ascertain the credit needs of the mortgage lender’s community, including the extent of its efforts to communicate with members of its community regarding the services it provides; 
• Marketing and special programs are offered to make members of the community aware of the mortgage lender’s services; 
• Participation in community outreach, community development or redevelopment, and educational programs; 
• Participation by the mortgage lender’s Board of Directors, Advisory Committee, Managing Members or Executive Management or equivalent body or person in formulating the mortgage lender’s policies and reviewing its performance; 
• Any practices intended to discourage application for types of credit offered by the mortgage lender; 
• The geographic distribution of the mortgage lender’s credit extensions, credit applications, and credit denials; 
• Evidence of prohibited discriminatory or other illegal credit practices; 
• The mortgage lender’s record of opening and closing offices and providing services at offices; 
• Participation in governmentally-insured, guaranteed, or subsidized loan programs for housing; 
• The mortgage lender’s ability to meet various community credit needs based on its financial condition, size, legal impediments, local  economic condition, and other factors; and 
• Other factors that, in the judgment of the Superintendent, reasonably bear upon the extent to which a mortgage lender is helping to meet the credit needs of its entire community.

The results of the DFS assessment may be the basis for denying an application or amendment request.  The assessment may also be made available to the public upon request.

In addition to New York, Massachusetts and Illinois also apply CRA-type laws to non-depository mortgage lenders.