The New York State Department of Financial Services (DFS) is proposing to expand the state’s version of the Community Reinvestment Act (CRA) to include nonbank mortgage lenders.
DFS Superintendent Adrienne A. Harris raised the idea by pointing to the increased prominence of nonbank entities in the mortgage lending sector. Harris noted that because many nonbank mortgage companies do not have physical branches, the proposed regulation tests will take place where the nonbanks are originating loans rather than where they have a physical branch presence. Testing would also determine how well lenders serve borrowers and if they offer programs and services that promote community development – but unlike the banks that fall under CRA regulations, nonbank lenders will not be required to make community development investments.
“Everyone deserves a fair shot at owning a home, regardless of their income level or where they live,” said Harris. “Nonbank mortgage companies originate a majority of home loans across the country and just like banks, these companies should be held accountable for meeting the credit needs of communities.”
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