DFS Proposes New Regulation to Ensure Access to Credit for All New Yorkers
New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris today proposed a regulation to ensure nonbank mortgage lenders are supporting access to home loans in the communities they serve. This expansion of New York’s Community Reinvestment Act (CRA) encourages equitable lending practices that benefit all neighborhoods, particularly those with low- and moderate-income residents.
“Everyone deserves a fair shot at owning a home, regardless of their income level or where they live,” said Superintendent Harris. “Nonbank mortgage companies originate a majority of home loans across the country and just like banks, these companies should be held accountable for meeting the credit needs of communities.”
Across the country, nonbank mortgage lenders have significantly increased their share of the market, originating approximately two-thirds of mortgages in 2022, compared to 39% in 2008.1 These new regulations will establish clear expectations for how these institutions should meet the credit needs of New Yorkers, providing greater accountability and improving access to home loans.
Leveraging the existing CRA regulation for banks, this regulation was developed with input from a wide range of stakeholders, including industry groups and consumer advocates, and considers the realities of non-depository mortgage lending.
Non-depository mortgage bankers who have made at least 200 originations in the preceding year will be evaluated under the new regulation. Unlike banks, many nonbank mortgage companies do not have physical branches. As a result, the proposed regulation tests where the lending takes place, not where the lenders have physical branches, to the extent they have any at all. A lending test will assess how well mortgage bankers serve borrowers in all areas, particularly those in underserved communities. Additionally, a service test will evaluate whether mortgage bankers offer programs and services that promote community development. Unlike banks, mortgage bankers will not be required to make community development investments, recognizing the differences in how these institutions operate.
Public input is a critical part of this process. The proposed regulation is subject to a 10-day preproposal comment period beginning today, followed by a 60-day comment period upon publication in the State Register. DFS will carefully review these comments to refine the rule as needed and ensure it best serves the needs of New Yorkers. The final regulation will take effect one year after it is issued.
Visit the DFS website to review the proposed regulation or submit feedback.
1 The Financial Stability Oversight Council, 2024 Annual Report, December 6, 2024.