Banks play a pivotal role in the economic wellbeing of our nation and local communities. Banks do this by being “financial intermediaries” facilitating the flow of funds between savers and borrowers. This obligation is so important that Congress passed legislation mandating that banks be periodically examined by regulators to evaluate and rate their performance with this critical function. The legislation is called the Community Reinvestment Act, or CRA. Additionally, the nation’s “fair lending” laws require regulators to determine if banks are “redlining” or avoiding minority neighborhoods. An important source of the data used for these purposes is reported annually by the CFPB under the Home Mortgage Disclosure Act, or “HMDA”. As stated in the 2019 “Disclosure of Loan-Level HMDA Data” policy guidance, “HMDA identifies its purposes as providing the public and public officials with sufficient information to enable them to determine whether financial institutions are serving the housing needs of the communities in which they are located, and to assist public officials in their determination of the distribution of public sector investments in a manner designed to improve the private investment market.” Strangely, however, the “Bureau” goes to great lengths to disguise critical details related to multifamily mortgages reported under HMDA.

When the reported HMDA data was last substantially revised in 2015 effective in 2018 the Bureau in its 2019 policy guidance decided that it was necessary to obscure the activity reported for multifamily housing units and “affordable” dwelling units. Rather than report the actual numbers of dwelling units and affordable housing units financed in the reported multifamily mortgage data, the Bureau decided it would publish the activity by reporting the multifamily dwelling units in “bins” (groupings based on 5 different ranges of the number of units of 5 or more financed by each multifamily mortgage) and the affordable housing units as a percentage of the housing units associated with each multifamily mortgage. By doing this the Bureau has made it impossible to determine how many apartment units are being financed and how many of those apartments are “affordable”. This data is extremely critical to determining how lenders are helping meet the housing needs of the community. As one commentor stated in response to the 2015 HMDA NPR, “the new data is vital to accurate and complete fair lending analysis and to understand the housing needs of communities”. Nevertheless, the Bureau has deliberately withheld this crucial data from the public.

In cities multifamily housing frequently accounts for the majority of dwelling units. Moreover, the poor and underserved population tends to be concentrated in urban areas. In other words, not only does multifamily housing frequently provide for the majority of housing for city dwellers, but it is also extremely depended on by the neediest families. A good example can be found in the 2024 demographic data published by the FFIEC. In the five boroughs that make up New York City, multifamily housing accounts for 61.3% of all housing units and slightly more than that in the low- and moderate-income tracts where it provides 61.8% of all housing units. The same data also shows that only 45.6% of rental housing units in New York City are affordable. The number of dwellings and affordable units financed by multifamily mortgages would be of great value to measure the progress of communities addressing the shortfall of housing units and especially affordable housing. The specific data is reported by lenders, but it is not disclosed by the CFPB in the annual HMDA data published by the Bureau.

Why is the Bureau disguising data necessary to measure the housing situation and how it is being fulfilled? In January 2019 Policy Guidance, the Bureau applied what it described as the “balancing test” in which the public benefit of disclosed data is weighed against the potential “privacy risks”. Initially, the Bureau proposed publication of the counts of dwelling units and affordable units. However, after objections from some lenders, in its 2019 Final Policy Guidance the CFPB determined to disguise the exact number of dwelling units and affordable units financed by each multifamily mortgage.

The Bureau described its rationale as an effort to “protect against ‘re-identification’” of the borrower. This is surprising because it’s an industry practice to publicize multifamily mortgage lending projects as a form of advertising and public relations, especially when affordable housing units are involved. As the Bureau commented in its policy, “an adversary could match the reported total units for multifamily loans with publicly available information about the number of units in multifamily property, because the information is widely available to the public from sources including public records and real estate websites.” Moreover, affordable housing units as applied under the rule are only “income restricted pursuant to Federal, State, or local affordable housing programs.” In other words, detailed data about affordable housing units in any project is publicly available without the HMDA data. So, disguising the multifamily and affordable housing units in the form of binned data and percentages doesn’t prevent a competitor from getting that information.

Housing is one of the top needs of every community, particularly the underserved population. Demographic data clearly shows that there is a significant shortage of affordable housing in many communities across the country. As in NYC, in many areas “high cost” housing is more than half the housing available in urban areas. But the annual HMDA market data released by the CFPB provides little or no insight regarding mortgage lending activity that supports multifamily housing and affordable rental units – even though the detailed data is reported by lenders subject to the HMDA. Having the exact numbers of dwelling units and affordable housing financed annually would be of great public value measuring the progress of meeting the housing needs of all communities, especially the urban areas.

It's time for the Bureau to reconsider its decision to disguise the counts of dwelling units and affordable housing units financed by multifamily mortgages. The benefits of the data would far exceed the “re-identification risk”. As the Bureau commented in the 2019 Policy Guidance, “The Bureau believes that some degree of re-identification risk in connection with the public disclosure of the data is acceptable because HMDA requires the Bureau to consider not only the risk posed by disclosure, but also the benefits of disclosure to HMDA’s purpose. The Bureau does not believe that HMDA permits it to modify data based solely on the existence of a ‘chance’ that HMDA data could be used for harmful purposes.”

The Bureau should reread its own words and fully disclose all multifamily dwelling units and those that are affordable. The insights provided by that data would benefit the public enormously.