The Mortgage Bankers Association asked besieged New York Gov. Andrew Cuomo to veto a bill which would enact Community Reinvestment Act-like requirements for independent mortgage banks (IMBs) chartered in the state.
If the bill were enacted, regulators would scrutinize applications submitted by mortgage bankers licensed in New York based on the “performance of the mortgage banker in helping to meet the credit needs of its entire community, including low and moderate income neighborhoods.”
Regulators would also assess IMBs’ record based on a number of factors, including marketing practices and community outreach, the geographic distribution of its credit extensions, applications, and credit denials, and its participation in government-subsidized loan programs.
The MBA called the bill “unnecessary,” and said it “fails to consider the existing legal infrastructure and significant industry efforts that have greatly expanded mortgage lending to low- and moderate-income (LMI) borrowers in New York.”
The trade group added that the bill “advances a false narrative” that IMBs are unregulated, a view which it, and others who have argued against imposing such requirements on nonbanks, stridently opposed.
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“The Fair Housing Act and Equal Credit Opportunity Act (ECOA) apply to all mortgage lenders, IMBs included, and include strict penalties for discrimination,” the MBA wrote.
It also pointed out that there is a “vast network of state and federal regulators” that already enforce those rules, including the Consumer Financial Protection Bureau, the U.S. Department of Justice, the Housing and Urban Development Office of Fair Housing, the New York State Attorney General, and the New York Department of Financial Services.
Nevertheless, the bill, which is sponsored by two Democratic representatives of Buffalo, New York, Democratic state Assembly member Crystal Peoples-Stokes and Sen. Tim Kennedy, has so far sailed through both houses of the state legislature. It now awaits Cuomo’s signature.
The MBA sent the letter requesting he veto the measure at the end of July, before the New York Attorney General published a report which found he sexually harassed 11 women. In the wake of the report, Democrats including President Joe Biden and Sen. Majority Leader Chuck Schumer (D-NY) called for him to resign.