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New York updates mortgage lending rules: Here’s how banks will comply

The state Department of Financial Services provided guidance to regulated mortgage lenders who are responsible for approvals and denials in terms of credit between same-sex and opposite-sex applicants.

It’s the Fair Lending Law, which prohibits discrimination in granting, withholding, extending, renewing, and adjusting rates and terms of any credit based on sexual orientation.

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The following actions were urged by DFS so that mortgage lenders stay in compliance and avoid issues of discrimination:

  • Vest the Board of Directors and senior management with responsibility for developing a fair lending plan and ensuring that the Mortgage Lender’s practices comply with the plan’s provisions;
  • Monitor implementation of the fair lending plan and adherence to the plan’s policies and procedures, continually addressing application and underwriting processes as well as pricing policies;
  • Implement a training program for new hires, current employees and management.  At least semi-annually, provide lending personnel updates on fair lending issues.
  • Ensure automatic and timely review by a higher-level supervisor of all rejected or withdrawn applications for loans from same-sex pairs who indicated that they would live together in the mortgaged property;
  • Extend, in writing, the principles of the fair lending plan to the Mortgage Lender’s refinancing and collection practices; and
  • Periodically review and update the fair lending compliance program and fair lending plan, including periodic review by senior management, to ensure that they remain current.

The DFS is urging mortgage lenders to take compliance actions, such as using rate sheets and exemption logs to document applications.

Categories: New York StateNews