NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6247A
TITLE OF BILL:
An act to amend the banking law, in relation to the assessment of the
record of performance of mortgage bankers in helping to meet the credit
needs of local communities
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to expand the requirements of the state
community reinvestment act to non-depository lenders.
SUMMARY OF PROVISIONS:
Section 1. Creates a new section, 28-bb of the banking law, to require
non-depository lenders to participate in the community reinvestment act.
Section 2: Sets the effective date
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
Section 1. Creates a new section, 28-bb of the banking law, establishing
community reinvestment act reporting guidelines for licensed mortgage
bankers. Additionally this bill would create guideline for assessing
such lenders record of performance through factors, including:
*Activities conducted to ascertain credit needs of the community;
*The extent to which marketing and promotions make the community aware
of services offered;
*The extent of participation by the mortgage banker's leadership bodies
in formulating policies and reviewing performance'
*Participation in community outreach, development, redevelopment and
*Any practices intended to discourage applications for types of credit;
*Geographical distribution of credit offers;
*Evidence of prohibited discriminatory or other illegal credit prac-
*The record of opening and closing offices;
*Participation in government -insured, guaranteed or subsidized loan
programs for housing;
*Ability to meet community credit needs; and
*Other factors that bear upon the extent to which the mortgage banker is
meeting the community credit needs.
Redlining, or the systematic form of housing discrimination, service
denial, or deceptive and fraudulent lending practices based on racial or
ethnic composition, has undeniably shaped and hindered the City of
Buffalo in the past, and there is work to be done to eradicate its pres-
ence from the lives of our underprivileged and neglected ethnic communi-
ties. The consequences of redlining include poor housing conditions, the
disparity in educational and employment opportunities, inadequate trans-
portation infrastructure, instability in access to healthcare, etc.
Redlining's aptitude to exacerbate housing discrimination is correlated
with the overall decreased economic opportunity of marginalized communi-
ties. With the ongoing COVID-19 pandemic crisis, this and racial health
inequities have heightened and it is the job of legislative reform to
address all possible aggravations of redlining.
The Department of Financial Services administration of the State's
Community Reinvestment Act (CRA) actively works to eliminate the housing
discrimination fostered by redlining. More specifically, the CRA
requires banks to define their service area, evaluating how well said
banks provided banking services to the entire community rather than
excluding particular populations. In relation to redlining's extensive-
ness, while the CRA applies to banks, it is currently inapplicable to
non-depository lenders. Omitting non-depository lenders, who currently
hold a substantial portion of the mortgage lending market, from CRA
monitoring leaves communities vulnerable to fair lending abuses in the
New York State residential loan market.
In February of 2021, the Department of Financial Services released a
report on redlining within the City of Buffalo. In it, DFS recommended
that non-depository lenders are extended into CRA's mechanisms of inves-
tigation and compliance. Accomplishing so would increase lending to
minorities and low-income borrowers as they are currently served at
higher rates than CRA regulated banks. This is collaborated by Homestead
Funding Corp, a non-depository lender who explained that its ability to
reach minority populations in the Buffalo area is partly attributable to
the fact that it operates in another state with CRA requirements on
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
This act shall take effect on the ninetieth day after it shall have
become a law. Effective immediately, the addition, amendment and/or
repeal of any rule or regulation necessary for the implementation of
this act on its effective date are authorized to be made and completed
on or before such effective date.