A new law in New York took effect on June 11, 2025 ,requiring banking organizations, licensed lenders, and mortgage bankers provide a disclosure pamphlet titled “What Mortgage Applicants Need to Know” (the “Pamphlet”). 

Effective immediately, the applicable version of the Pamphlet (linked below) 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 Department of Financial Services (“NYDFS” or “the Department”) website there are links to various versions of the Pamphlet in English, Spanish, Bengali, Chinese, Haitian, Italian, Korean, Polish, Russian, Urdu, and Yiddish. 

Below is a summary of the new law. 

INTRODUCTION

NY AB 9686 was signed into law by New York State Governor Kathy Hochul on December 30, 2024, took effect on June 11, 2025, and is now part of New York Banking Law Chapter 566 (“NY 566”). To underscore the point above, under NY 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 by a hyperlink to the Pamphlet posted on the Department’s website. 

You can view NY AB 9686 here.

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. This 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 must make it clear that applicants have the right to:

1. Compare and negotiate the charges of different mortgage brokers and lenders to obtain the best loan possible.
2. Ask their mortgage broker to explain such person's responsibilities within the mortgage lending process.
3. Know how much the mortgage broker is compensated by the applicant and the lender for their loan.
4. Receive a clear and truthful explanation of the terms and conditions of the loan.
5. Know if the loan being offered is a fixed-rate or adjustable-rate mortgage loan, whether the loan can be transferred or refinanced, the exact amount of their monthly loan payments (including any projected escrow payments), the final annual percentage rate, and the amount of regular payments at the loan's closing.
6. 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, and for which services a loan applicant can and cannot shop. They are entitled to receive such estimate within three business days of applying for a loan.
7. Obtain credit counseling before closing a loan.
8. Decide whether or not to finance any portion of the points or fees.
9. Refuse to purchase credit insurance for any mortgage loan.
10. Have their property appraised by an independent licensed professional and to receive a copy of the appraisal.
11. Not be subject to deceptive marketing practices.
12. Ask for the Consumer Financial Protection Bureau's (“CFPB”) booklet, "Your home loan toolkit."
13. Receive the following documents, and every document otherwise required to be given to them at closing under federal and New York state law:
    1. Loan estimate,
    2. Closing disclosure.
14. Know what deposits and fees are not refundable if they decide to cancel the loan agreement.
15. Receive in writing the reason for the denial or conditional approval of their loan application.
16. Know, if refinancing, that they may cancel a loan within three days of the closing by providing written notification of cancellation to the licensed lender or banking institution.
17. Receive the Closing Disclosure three days before the closing takes place.
18. Have any lending disputes resolved in a fair and equitable manner.
19. Receive a credit decision that is not based upon their race, color, national origin, religion, sex, family status, sexual orientation, disability, or whether any income is from public assistance.
20. File a complaint with the Department or the CFPB 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 governing such person's conduct in working with them to get or process a mortgage loan.
21. File a complaint with the New York State Department of State or the CFPB if they believe that a real estate broker has violated any rules, regulations or laws governing such person's conduct in working with them to purchase a home.

CONCLUSION 

This new legislation mandates disclosure of a series of best practices for the residential mortgage industry. NYDFS is working on additional versions of the Pamphlet in French and Arabic that are expected to be released in the coming weeks.