On January 8, the NYDFS announced it finalized a new regulation expanding New York’s Community Reinvestment Act (CRA) to cover nonbank mortgage lenders operating in the state. The rule requires these lenders to meet the credit needs of the communities they serve, with a particular focus on low- and moderate-income neighborhoods. The regulation establishes a framework for evaluating nonbank mortgage bankers based on lending and service tests, assessing both their distribution of mortgage loans and their efforts to promote community development through outreach, marketing, and educational programs.

Under the new rule, nonbank mortgage bankers that originated at least 200 loans in New York in the previous year are subject to regular performance evaluations. Lenders with physical branches are assessed within designated geographic areas, while lenders without a branch in the state are subject to the lending and services tests of the area in which they originated the most loans in the preceding two years. The regulation does not, however, require mortgage bankers to make community development investments due to operational differences from traditional banks. The final rule will take effect July 7.