NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6247A
SPONSOR: Peoples-Stokes 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
educational programs;
*Any practices intended to discourage applications for types of credit;
*Geographical distribution of credit offers;
*Evidence of prohibited discriminatory or other illegal credit prac-
tices;
*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.
JUSTIFICATION:
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
non-depository institutions.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
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.
STATE OF NEW YORK
________________________________________________________________________
6247--A
2021-2022 Regular Sessions
IN ASSEMBLY
March 10, 2021
___________
Introduced by M. of A. PEOPLES-STOKES -- read once and referred to the
Committee on Banks -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
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 cred-
it needs of local communities
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 28-bb
2 to read as follows:
3 § 28-bb. Credit needs of local communities; mortgage bankers. 1. When
4 taking any action on an application made by a mortgage banker licensed
5 pursuant to section five hundred ninety-one of this chapter for a change
6 in control under section five hundred ninety-four-b of this chapter, or
7 on any other application or notice to which the superintendent of finan-
8 cial services shall by rule or regulation make applicable the provisions
9 of this section, the superintendent shall take into account, among other
10 factors, an assessment, in writing, of the record of performance of the
11 mortgage banker in helping to meet the credit needs of its entire commu-
12 nity, including low and moderate income neighborhoods, and consistent
13 with safe and sound operation of the mortgage banker. Such assessment
14 and any written communications from the department of financial services
15 to a mortgage banker relating to such assessment shall be made available
16 to the public upon request, provided that nothing contained in this
17 subdivision shall be deemed to alter, amend or affect the provisions of
18 subdivision ten of section thirty-six of this article. In making such
19 assessment of a mortgage banker, the superintendent shall review all
20 reports and documents filed by the mortgage banker pursuant to section
21 five hundred ninety-seven of this chapter. In addition, the superinten-
22 dent shall consider the following factors in assessing a mortgage bank-
23 er's record of performance, and include in its written assessment
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09503-02-1
A. 6247--A 2
1 required by this section the record of performance of such mortgage
2 banker as to each of the following factors:
3 (a) Activities conducted by the mortgage banker to ascertain credit
4 needs of its community, including the extent of the mortgage banker's
5 efforts to communicate with members of its community regarding the
6 services being provided by the mortgage banker;
7 (b) The extent of the mortgage banker's marketing and special programs
8 to make members of the community aware of the services offered by the
9 mortgage banker;
10 (c) The extent of the mortgage banker's participation in community
11 outreach, community development or redevelopment, and educational
12 programs;
13 (d) The extent of participation by the mortgage banker's board of
14 directors, advisory committee, managing members or executive management
15 or equivalent body or person, in formulating the mortgage banker's poli-
16 cies and reviewing its performance with respect to the purposes of this
17 section;
18 (e) Any practices intended to discourage application for types of
19 credit offered by the mortgage banker;
20 (f) The geographic distribution of the mortgage banker's credit exten-
21 sions, credit applications, and credit denials;
22 (g) Evidence of prohibited discriminatory or other illegal credit
23 practices;
24 (h) The mortgage banker's record of opening and closing offices and
25 providing services at offices;
26 (i) The mortgage banker's participation in governmentally-insured,
27 guaranteed or subsidized loan programs for housing;
28 (j) The mortgage banker's ability to meet various community credit
29 needs based on its financial condition, size, legal impediments, local
30 economic condition and other factors; and
31 (k) Other factors that, in the judgment of the superintendent, reason-
32 ably bear upon the extent to which a mortgage banker is helping to meet
33 the credit needs of its entire community.
34 2. In assessing the record of performance of a mortgage banker pursu-
35 ant to the provisions of subdivision one of this section, the super-
36 intendent may, where he or she deems it appropriate, provide for public
37 hearings when an objection to the mortgage banker's application or
38 notice has been submitted.
39 3. An assessment of a mortgage banker's record of performance under
40 subdivision one of this section may be the basis for denying an applica-
41 tion under the provisions of this section.
42 4. Notwithstanding any other provision of this chapter or other law to
43 the contrary, the term mortgage banker when used in this section shall
44 mean and include mortgage bankers licensed pursuant to section five
45 hundred ninety-one of this chapter that originate a minimum number of
46 loans annually, such number to be set by regulation promulgated by the
47 superintendent.
48 5. The superintendent is hereby authorized and empowered to promulgate
49 rules and regulations effectuating the provisions of this section,
50 including any rules and regulations providing that the assessment of
51 mortgage bankers shall be made on a graduated numerical basis.
52 6. If any clause, sentence, paragraph, subdivision or part of this
53 section or the application thereof to any person, firm, or corporation,
54 or circumstance shall be adjudged by any court of competent jurisdiction
55 to be invalid or unconstitutional, such judgment shall not affect,
56 impair or invalidate the remainder thereof, but shall be confined (i) in
A. 6247--A 3
1 its operation to the clause, sentence, paragraph, subdivision, or part
2 of this section or (ii) in its application to the person, firm or corpo-
3 ration, or circumstance, directly involved in the controversy in which
4 such judgment shall have been rendered.
5 § 2. This act shall take effect one year after it shall have become a
6 law. Effective immediately, the addition, amendment and/or repeal of any
7 rule or regulation necessary for the implementation of this act on its
8 effective date are authorized to be made and completed on or before such
9 effective date.
