InfoBytes Blog

NYDFS implements state CRA revisions

On February 8, NYDFS announced the adoption of updates to the state’s Community Reinvestment Act (CRA) regulation. The final regulation implements amendments to Banking Law § 28-b, and allows the Department to obtain necessary data to evaluate how well regulated banking institutions are serving minority- and women-owned businesses in their communities. These findings will be integrated into institutions’ CRA ratings, NYDFS said. As previously covered by InfoBytes, NYDFS issued proposed revisions last October, announcing that the modifications are intended to minimize compliance burdens by making sure the regulation’s proposed language complements requirements in the CFPB’s proposed rulemaking for collecting data on credit access for small and minority- and women-owned businesses. The final regulation details how regulated institutions must collect and submit the necessary data to NYDFS while abiding by fair lending laws. Regulated institutions must inquire as to whether a business applying for a loan or credit is minority- or women-owned or both, and submit a report to the Department providing application details, such as the date of application, type of credit applied for and the amount, whether the application was approved or denied, and the size and location of the business. The final regulation also includes a form for regulated institutions to use to obtain the required data from business loan applications. NYDFS said it will publish a data submission template in the coming months for regulated institutions to use during CRA evaluations. The final regulation takes effect August 8, and provides for a compliance date six months following the publication of the Notice of Adoption in the State Register. Regulated institutions will also have an additional transition period of three months from the compliance date to comply with certain provisions.

State Issues State Regulators NYDFS Bank Regulatory New York CRA Agency Rule-Making & Guidance Fair Lending

NYDFS finds racial disparities in mortgage lending

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.

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

NYDFS revises state CRA regulations

On October 26, NYDFS released revisions to its proposed state Community Reinvestment Act regulation, which would allow the Department to obtain the necessary data to evaluate the extent to which New York-regulated banking institutions are serving minority- and women-owned businesses in their communities. The revised proposed regulation addresses comments received during a prior 60-day comment period that began last November (covered by InfoBytes here), and is intended to minimize compliance burdens by making sure the regulation’s proposed language complements requirements in the CFPB’s proposed rulemaking for collecting data on credit access for small and minority- and women-owned businesses. Among other things, the revised proposed regulation would require regulated entities to inquire as to whether a business applying for a loan or credit is minority- or women-owned or both, and submit a report to the Department providing application details, such as the date, type of credit applied for and the amount, whether the application was approved or denied, and the size and location of the business. Additionally, the revised proposed regulation (i) establishes processes for regulated entities when soliciting, collecting, storing, and reporting information related to their provision of credit to minority- and women-owned businesses, including when requests for information should be made, and notifications informing applicants of their right to refuse to offer information in response to a request and that the provided information may not be used for any discriminatory purpose; (ii) provides that, to the extent feasible, underwriters should not be able to access information provided by an applicant; (iii) stipulates how long a regulated entity is required to preserve gathered information; and (iv) provides a sample data collection form that regulated entities may choose to use. According to NYDFS, the revisions are designed to make sure regulated entities abide by fair lending laws when collecting and submitting the necessary data. Comments will be accepted for 45 days following publication in the State Register.

State Issues Bank Regulatory Agency Rule-Making & Guidance NYDFS New York New York CRA Fair Lending