NYDFS finds racial disparities in mortgage lending

State Issues Bank Regulatory NYDFS New York Mortgages New York CRA Fair Lending Redlining

On December 8, NYDFS announced a second report in an ongoing statewide inquiry into redlining and other forms of housing discrimination by mortgage lenders, particularly non-depository lenders. This report focuses on racial disparities in mortgage lending in Long Island, Rochester, and Syracuse, and follows one on Buffalo (covered by InfoBytes here). The report maps lending activity and details individual institutions' lending in majority-minority neighborhoods and to borrowers identifying as members of a minority group. 

Analyzing HMDA data, NYDFS’s recent report concluded that: “ In Nassau county, where the population is 41.8 percent non-white, on average, lenders make 35.32 percent of their loans to borrowers identifying as people of color. Among lenders operating in the county, lending to borrowers identifying as people of color ranges from 14.9 percent to 50.22 percent. In Suffolk county, where the population is 33.7 percent non-white, on average, lenders make 22.44 percent of their loans to borrowers identifying as people of color. Among lenders operating in the county, lending to borrowers identifying as people of color ranges from 13.07 percent to 36.85 percent. In the Rochester metro area, where 23.9 percent of the population is non-white, on average lenders make 11.32 percent of their loans to borrowers identifying as people of color, less than half of what would be expected based solely on population make-up. Similarly in the Syracuse metro area, 18.7 percent of the population is non-white, but on average lenders make 8.67 percent of their loans to borrowers identifying as people of color.”

In the announcement, NYDFS noted that it is currently developing regulations to implement the updated New York Community Reinvestment Act, which expands oversight to non-depository mortgage lenders operating in the state. The insights uncovered through these reports’ investigations will be reflected in these proposed regulations which will be published for public comment in 2023.