New York has adopted yet another new regulation requiring a significant new disclosure pamphlet for residential mortgage loans. The new law took effect on June 11, requiring banking organizations, licensed lenders and mortgage bankers to provide a disclosure pamphlet titled "What Mortgage Applicants Need to Know."
Effective immediately, the applicable version of the attached pamphlet must be provided to an applicant applying for a residential mortgage loan no later than the third business day after the date the applicant's loan application is received.
On the New York State Department of Financial Services website, there are links to various versions of the pamphlet in English, Spanish, Bengali, Chinese, Haitian, Italian, Korean, Polish, Russian, Urdu and Yiddish.
The pamphlet is available free of charge, and affected mortgage originators will need to provide the pamphlet and be able to prove that they have done so within three business days of an application.
Introduction
NY A.B. 9686 was signed into law by New York Gov. Kathy Hochul on Dec. 30, 2024, took effect on June 11, and is now part of New York Banking Law Chapter 566.
To underscore the point above, under Chapter 566, the pamphlet must be provided to an applicant applying for a residential mortgage loan no later than the third business day after the date the applicant's loan application is received, and in the form prescribed by the department, including being accessible in multiple languages.
The pamphlet can be provided to applicants via electronic communications, including via email or a hyperlink to the pamphlet posted on the department's website.
Summary
The term "banking organization" in the New York Banking Law is defined as "all banks, trust companies, private bankers, savings banks, safe deposit companies, savings and loan associations, credit unions, and investment companies."
Regulation only applies to entities that are licensed or chartered under New York law, so the new law would not apply to federally chartered institutions. Although mortgage brokers are not included in the definition of banking organization, it is recommended they comply with this new law and provide the pamphlet or a link to the version that is most appropriate for the applicant.
The pamphlet reads like a borrower bill of rights, or more precisely, an applicant's bill of rights, and must include that applicants have various rights such as the right to compare different providers' charges to obtain the best loan possible, ask a mortgage broker to explain "responsibilities" within the mortgage lending process, and know a mortgage broker's compensation by the applicant and the lender.
Moreover, an applicant must receive an explanation of the loan's terms and conditions.
Banking organizations subject to the pamphlet must disclose to the applicant if the loan being offered is a fixed-rate or adjustable-rate mortgage loan, whether the loan can be transferred or refinanced, and disclose the exact amount of the applicant's monthly loan payments, including any projected escrow payments, the final annual percentage rate, and the amount of regular payments at the loan's closing.
The pamphlet discloses to applicants that they have the right to:
ask for a loan estimate detailing all loan and settlement charges before they agree to the loan and pay any fees, including without limitation, loan application fees, title search and insurance fees, lender's attorney fees, property appraisal charges, inspections, recording fees, late payment fees, transfer taxes, point and origination fees, escrow account balances, which services a loan applicant can shop for and which they cannot.
Applicants are entitled to receive such estimate within three business days of applying for a loan.
Among the myriad of rights disclosed in the pamphlet are the rights to
- Acquire credit counseling before "closing a loan";
- Determine if financing any portion of the points or fees is worthwhile;
- Turn down credit insurance for a mortgage loan; and
- Have a property appraised "by an independent licensed professional" and obtain a copy of that appraisal.
The pamphlet includes several rights that already exist under applicable federal and/or state law, as well as several common-sense best practices such as that "an applicant shall not be subject to deceptive marketing practices."
The pamphlet recommends that all applicants ask for "Your home loan toolkit," a Consumer Financial Protection Bureau booklet. Moreover, it reiterates existing regulations that mandate all applicants to receive a loan estimate and closing disclosure.
Several of the disclosures in the pamphlet paraphrase existing consumer protections found in both federal and state regulations.
For example, applicants have the right to
- Know which "deposits and fees are not refundable" when canceling a loan agreement;
- Receive "in writing the reason for the denial or conditional approval of their loan application";
- Know that when refinancing they can cancel a loan within three days of closing "by providing written notification of cancellation to the licensed lender or banking institution";
- Receive "the closing disclosure three days before the closing takes place"; and
- Receive a decision not based on "race, color, national origin, religion, sex, family status, sexual orientation, disability, or whether any income is from public assistance."
Moreover, the pamphlet instructs applicants to file a complaint if they "believe that a mortgage broker or any other entity licensed by the department or the [CFPB] has violated any rules, regulations or laws which govern such person's conduct in working with [them] to get or process a mortgage loan" as well as if they believe "that a real estate broker has violated any rules, regulations or laws that govern such person's conduct in working with [them] to purchase a home."
Finally, the pamphlet reminds applicants that they have the "right to have any lending disputes resolved in a fair and equitable manner."
Conclusions
This new legislation mandates disclosure of a series of best practices for the residential mortgage industry. Essentially, the pamphlet serves as a borrower bill of rights. The pamphlet provides common-sense do's and dont's that serve as a reminder to borrowers and the mortgage industry to follow existing best practices as well as certain new requirements that are highlighted in the pamphlet.
Furthermore, the NYDFS is working on additional versions of the pamphlet in French and Arabic that are expected to be released in the coming weeks. It is worth noting that the regulation itself only mandates that the NYDFS publish five versions of the pamphlet, citing the most popular languages. However, the department has already published more than a dozen versions of the pamphlet.
As far as impact on the industry, the residential mortgage application process is already very paper-intensive, and lenders are generally adept at providing disclosures such as this pamphlet that are static and do not change based on the loan terms.
The challenge to lenders will be to provide the pamphlet on a timely basis, in the proper language (the borrower's predominant language utilized in a loan application process), and to be able to prove that the pamphlet was provided throughout the lifetime of the loan, which could be as long as 30 years.
Technically mortgage brokers are not governed by the regulation, but it seems likely and appropriate that they also provide the pamphlet if they took the loan application. Whether a mortgage broker does or does not provide the pamphlet, it would be wise for the lender to provide its own copy of the pamphlet to the borrower and obtain a well-crafted acknowledgment from the borrower of their receipt and understanding of the pamphlet and its terms.
"A Primer for Lenders on NY’s New Mortgage Disclosure Regs," by Scott D. Samlin was published in Law360 on October 14, 2025.
