1. (1) The lending test evaluates a mortgage banker’s record of helping to meet the credit needs of its assessment area(s) through home mortgage lending activity.

2. (2) The department considers originations and purchases of mortgage loans as reported by the mortgage banker under HMDA. The department may also consider any other mortgage loan data the mortgage banker may provide.

   (b) Performance criteria.

   The department evaluates a mortgage banker’s lending performance pursuant to criteria which may include the following:

3. (1) Lending activity. The number and amount of the mortgage banker’s mortgage loans in the mortgage banker’s assessment area(s).

4. (2) Geographic distribution. The geographic distribution of the mortgage banker’s mortgage loans based on the loan location, including:

   1. (i) the proportion of the mortgage banker’s lending in the mortgage banker’s assessment area(s);
   2. (ii) the dispersion of lending in the mortgage banker’s assessment area(s); and
   3. (iii) the number and amount of mortgage loans in low-, moderate-, middle-, and upper-income geographies in the mortgage banker’s assessment area(s).
5. (3) Borrower characteristics. The distribution, particularly in the mortgage banker’s assessment area(s), of the mortgage banker’s mortgage loans based on borrower characteristics, including the number and amount of mortgage loans to low-, moderate-, middle-, and upper-income individuals.
6. (4) Innovative or flexible lending practices. The mortgage banker’s use of innovative or flexible lending practices, in a safe and sound manner, to address the credit needs of low- or moderate-income individuals or geographies, or underserved individuals or geographies, including governmentally insured, guaranteed, or subsidized loan programs for housing, as appropriate for each borrower.
7. (5) Harmful practices. A mortgage banker’s rating on the lending test may be adversely affected by harmful practices such as those intended to discourage application for or extension of credit offered by the mortgage banker or which may result in harm to low- and moderate-income individuals.
8. (6) Third-party lending. No mortgage banker may include a mortgage loan origination for consideration if another mortgage banker or depository institution claims the same mortgage loan origination under this Part, under section 28-b of the Banking Law or its implementing regulations, or under the federal Community Reinvestment Act.

(a) Scope of test.

The scope of the lending test is as follows: