Essential Information

William Apgar

Assistant Secretary - Office of Housing

U.S. Department of Housing and Urban Development

451 Seventh Street, SW

Washington DC 20410

Dear Mr. Apgar,

On March 9, 2000, the U.S. Department of Housing and Urban Development (HUD) proposed new housing goal requirements for Fannie Mae and Freddie Mac (collectively, the Government Sponsored Enterprises or the GSEs). These proposed rules contained vital provisions that would have expanded the scope of mortgage loan data on GSE performance in serving local housing credit needs that HUD makes available to the public. Unfortunately, when HUD adopted new GSE housing goal regulations on October 31, 2000, the proposed provisions for expanded public disclosure of GSE loan data were not included in the final rules.

Essential Information is a national consumer organization that through its GIS for Equitable and Sustainable Communities Project works extensively with local, nonprofit, community-based organizations on a wide range of community reinvestment, affordable housing, and fair housing issues. We strongly urge HUD to adopt the proposed provisions for expanded public disclosure of GSE loan data items before the end of the Clinton Administration.

The HUD proposal to expand the number of the GSE loan data items made available to the public would apply to several of the data files in the GSE public use database: the census tract level file for 1-4 family housing loans and the national level files for 1-4 family housing loans and multifamily housing loans. We support this broad expansion of the GSE public use database.

Our primary concern, however, is focused on the part of the proposal that would increase GSE disclosure of loan data items at the census tract level. Census tract level loan data, such as that disclosed by mortgage lenders pursuant to the Home Mortgage Disclosure Act (HMDA), is critical to evaluating the performance of the GSEs in supporting the residential mortgage market at the neighborhood level.

The public should be able to monitor on a neighborhood-by-neighborhood basis the performance of the GSEs in serving housing finance needs, especially those relating to affordable housing. Such public monitoring is warranted given the central role of the GSEs in allocating the large federal housing subsidy that arises from the implicit federal guarantee of GSE financial liabilities - a subsidy that has grown to roughly $10 billion per year. Simply put, the public has

the right to know what the GSEs are doing within the various neighborhoods of each community and this holds true even if the GSEs do not operate subject to a strict regulatory obligation to provide a precisely uniform level of support to the mortgage market in all neighborhoods of all communities across the nation.

Community-based organizations engaged in community reinvestment and affordable housing initiatives work primarily at the neighborhood level. Such organizations need access to census tract level data on GSE loan purchase activity in order to effectively evaluate the performance of the GSEs in their neighborhoods, devise knowledgeable strategies for improving GSE performance, and possess even a small measure of bargaining power in negotiating with the GSEs. For such organizations, GSE loan data in national files, which lack a census tract element or some other geographic indicator identifying local neighborhoods, are of limited value.

Under HUD's existing disclosure rules for GSE loan data, the GSE loan disclosures at the census tract level do not include several key data items that mortgage lenders in the primary mortgage market are required to disclose under HMDA. The key HMDA items missing from

GSE census tract level loan disclosures for 1-4 family loans are: (i) loan purpose (home purchase or refinancing), (ii) tenure (owner-occupancy or rental), and (iii) loan type (conventional or federally-guaranteed). To a considerable extent, the failure of HUD to include these data elements in the current GSE loan disclosure system has discouraged community-based organizations from using the GSE public use database.

Sincerely,

Jonathan Brown

Director, GIS for Equitable and Sustainable Communities Project

Essential Information