Bank Regulators Begin Moving Forward with using UNHP BIP Data
Earlier this fall, UNHP and a number of our partners met with all four bank regulators in the Empire State Building to talk about how to measure and evaluate multifamily lending practices when examining banks for both the Community Reinvestment Act (CRA) Exam and for Safety and Soundness. Hosted by the FDIC and the New York State Department of Financial Services (DFS), the meeting highlighted the work of UNHP on both the Multifamily Assistance Center and the Building Indicator Project.
Enterprise and UNHP co-organized the meeting with FDIC and DFS, and the City’s Department of Housing Preservation and Development (HPD), CASA New Settlement Apartments and Mutual Housing Association of New York (MHANY) also presented about the impact banks can have with distressed multifamily housing in New York City.
In addition to giving background on the steep rise in sales prices with no corresponding rise in net operating income (i.e., profitability), and the fallout from the collapse of the real estate market, UNHP showed how the Building Indicator Project has been extremely effective and useful in assisting lenders to identify distressed properties in their portfolios and make a difference in conditions in those buildings:
- A growing number (20+) of multifamily lenders are using the BIP Database to proactively address issues of distressed properties
- In the period from June 2012 through April 2013, we witnessed a significantly higher level of improvements in properties financed by lenders who reported integrating BIP data into their asset management
- For properties that scored over 800 points in June 2012, there was a significant improvement in 59% of properties where we worked with the lender compared to an improvement in just 39% of properties where we don’t have a relationship with the lender
During this meeting, we made the case that the regulators can encourage better practices by utilizing data sources such as BIP when evaluating a bank for both their Community Reinvestment Act (CRA) exam and Safety and Soundness. DFS spoke about how they have already begun to integrate this into their CRA examination process, and the FDIC is on board in instances where they co-examine a bank with DFS. Both the Federal Reserve and the Office of the Comptroller of the Currency (OCC) were present at the meeting and are considering how and if they can also adopt any of these practices.
Overall, the meeting marked a significant step forward in our work to identify and improve distressed multifamily buildings in New York City and demonstrates the impact UNHP and the Building Indicator Project are having on multifamily lending practices in New York City.