New York has adopted new regulations, 3 NYCRR Part 120, that will extend New York’s Community Reinvestment Act (CRA) obligations to certain nonbank mortgage lenders operating in the state. Effective July 7, 2026, the rule will require New York State Department of Financial Services (DFS)‑licensed non‑depository mortgage bankers that have originated 200 or more New York State mortgage loans in the prior calendar year to demonstrate that they are providing fair and equitable access to home loans, especially for low‑ and moderate‑income New Yorkers.

The new rules are intended to create greater parity with banks, which have long been expected to help meet the credit needs of the communities they serve. Part 120 builds on New York’s 2021 update to its state CRA and comes at a time when, according to the DFS Superintendent’s press release, nonbank mortgage companies accounted for about 64% of mortgage originations nationwide in the second quarter of 2025.

The new rule is designed to close a regulatory gap by bringing large nonbank mortgage lenders into a CRA‑style framework. Because many such lenders operate without traditional branches, DFS will define “assessment areas” based on where loans are actually made, including for branchless and primarily online lenders. Evaluations will include a lending test (examining how loans are distributed across neighborhoods and income levels) and a service test (reviewing programs, services, outreach, marketing, and education that support community development), with DFS taking into account local demographics, market conditions, and peer performance.

DFS will assign public ratings — Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance — and will publish written evaluations, which it may consider when acting on licenses, branch or office applications, and other regulatory requests.

Unlike banks, nonbank mortgage lenders will not be required to make community development investments or grants. However, their ratings may be downgraded for discriminatory or other illegal credit practices under state or federal fair lending and consumer protection laws.

With the July 7, 2026 effective date approaching, nonbank mortgage lenders active in New York should begin reviewing their data, assessment areas, and community outreach to prepare for these new expectations.