Governor Hochul signs legislation extending the New York Community Reinvestment Act to non-depositary mortgage lenders



Governor Kathy Hochul today signed a law (S.5246-A / A.6247-A) to ensure equal access to credit by extending the New York Community Reinvestment Act (CRA) to non-depository lenders.

When the CRA was enacted in 1978, banks created the vast majority of mortgages. Since the 2008 financial crisis, non-depository lenders have dramatically increased their market share, and non-bank institutions are now responsible for the majority of mortgage origination in New York State and nationwide.

“This extension of the New York Community Reinvestment Act further strengthens this state’s commitment to ensuring that all New Yorkers have the opportunity to own property,” Governor Hochul said. “This legislation will ensure everyone has fair and equal access to loan options in their quest to purchase a home, especially in communities of color that continue to be affected by the effects of the pandemic and have historically faced to many other obstacles when looking for a mortgage. “

Acting Superintendent of Financial Services Adrienne A. Harris said: “The expansion of the New York CRA to cover non-depository lenders is a victory for consumers who rely on these lenders to finance their homes. This law guarantees borrowers equal access to mortgage financing and provides a thoughtful framework for them to be part of the solution to realizing the American dream of homeownership. I thank Governor Hochul and the New York State Legislature for modernizing the New York ARC.

In February 2021, the Department of Financial Services issued a report on its investigation into a possible red line in the Buffalo metro area and found that non-bank mortgage lenders, who were not covered by the New York CRA Banking Act § 28-b, did not service the all of their communities. ARC is a law designed to encourage covered institutions to meet the credit needs of all of their communities, including through the Ministry’s assessment of their lending activities.

The DFS investigation found that some lenders had little or no engagement with local communities of color and made little effort to engage them. DFS found little to no marketing directed to minority borrowers and no effort was made to serve majority minority neighborhoods in the metro area. DFS also found that lenders made little to no effort to determine how well they served minority communities.

Borrowers of color and low and moderate income communities remain underserved. This state CRA update is vital in encouraging key players in the mortgage market to better serve any New Yorker looking to buy a home.

Majority Leader Crystal Peoples-Stokes said: “We must continue to invest in our local communities, especially those which are largely made up of people of color, as the pandemic has exacerbated economic inequalities. This law is designed to build a stronger and fairer economic system by expanding access to property to our disenfranchised communities. Color.”

Senator Tim Kennedy said: “Redlining, in the form of institutionalized racism that it is, has unfairly targeted communities of color for decades in the City of Buffalo and across New York State. This legislation is intended to hold lending institutions accountable and to ensure that they truly serve the communities in which they do business. I was proud to introduce and expedite this legislation in the last session alongside Assembly Majority Leader Peoples- Stokes, and I thank Governor Hochul for promptly promulgating it.

Barika Williams, Executive Director, Association for Neighborhood and Housing Development (ANHD), “The Community Reinvestment Act (CRA) has long been one of the most important laws we have to hold banks accountable to serve and reinvest equitably in low and moderate income communities and communities of color that have been and continue to face restrictions and divestment.The ANHD thanks Governor Hochul and the New York State Legislature for now expanding the ARC to cover non-bank mortgage lenders in order to increase access to responsible credit and the financial resources our communities need. ”

Neha M. Karambelkar, of the Western New York Law Center, said: “This legislation is an important step for New Yorkers, especially underserved communities of color, to ensure they have the opportunity to own property and have equal access to financial products. This is a significant achievement for the Governor and the New York State Legislature to ensure the effectiveness of the ARC for minority and low and moderate income communities. ”

Kathryn Franco, President of the Niagara Community Reinvestment Coalition, said: “It is more critical than ever to ensure communities of color have more opportunities to access credit as we work to emerge from a global pandemic that has struck and added uncertainty to the economy. The expansion of the New York ARC to cover non-depository mortgage lenders facilitates access to credit for aspiring homeowners and provides the regulatory strengthening needed to further ensure community protection against mining or mining practices. ‘exploitation.


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