[Federal Register Volume 61, Number 202 (Thursday, October 17, 1996)] [Notices] [Pages 54322-54329] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-26380] [[Page 54321]] _______________________________________________________________________ Part III Department of Housing and Urban Development _______________________________________________________________________ Office of the Secretary _______________________________________________________________________ Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) Proprietary Data Submission; Notice Federal Register / Vol. 61, No. 202 / Thursday, October 17, 1996 / Notices [[Page 54322]] DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Office of the Secretary [Docket No. FR-4139-N-01] Final Order--Proprietary Data Submitted by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) AGENCY: Office of the Secretary, HUD. ACTION: Notice of final order. ----------------------------------------------------------------------- SUMMARY: This Notice sets forth a Final Order of the Secretary of Housing and Urban Development which provides that certain loan-level mortgage data submitted by the Federal National Mortgage Association (``Fannie Mae'', ``Government-Sponsored Enterprise'', or ``GSE'') and the Federal Home Loan Mortgage Corporation (``Freddie Mac'', ``Government-Sponsored Enterprise'', or ``GSE'') to HUD is proprietary and shall not be made available to the public. The Appendix to this Order sets forth the loan-level data elements that the Secretary has determined to be proprietary and, therefore, to be withheld from public use. In accordance with this Order, certain proprietary loan-level data elements are recoded, adjusted, or categorized in ranges to protect proprietary information and to permit the release of information to the public. EFFECTIVE DATE OF THE FINAL ORDER: October 1, 1996. FOR FURTHER INFORMATION CONTACT: Janet Tasker, Director, Office of Government-Sponsored Enterprises, Department of Housing and Urban Development, Room 6154, 451 Seventh Street, S.W., Washington, D.C. 20410, telephone (202) 708-2224. For questions on data or methodology, Harold Bunce, Director, Financial Institutions Regulation, Room 8204, at the same address, telephone (202) 708-2770; for legal questions, Kenneth A. Markison, Assistant General Counsel GSE/RESPA, Room 9262, at the same address, telephone (202) 708-3137 (these are not toll-free numbers). For hearing- and speech-impaired persons, these numbers may be accessed via TTY (text telephone) by calling the Federal Information Relay Service at 1-800-877-8339. SUPPLEMENTARY INFORMATION: The Final Order By the authority vested in me as Secretary of Housing and Urban Development, under sections 1323 and 1326 of the Federal Housing Enterprises Financial Safety and Soundness Act, 12 U.S.C. 4543 and 4546, (``the Act''), I have determined that certain loan-level mortgage data elements, as detailed in the attached Appendix and contained in the annual loan-level data files that have been and will be submitted by Fannie Mae and Freddie Mac to the Department of Housing and Urban Development in accordance with sections 309(m) of the Fannie Mae Charter Act, 12 U.S.C. 1723a(m), and 307(e) of the Freddie Mac Act, 12 U.S.C. 1456(e), shall be treated as proprietary information. Accordingly, under the authority of section 1326 of the Act, I hereby order that these proprietary data elements be withheld from public disclosure in accordance with section 1323 of the Act and HUD regulations. The Appendix further identifies data elements that are not proprietary information or that lose their proprietary character when categorized in ranges, adjusted, or recoded in other ways. The data so identified in the Appendix shall be made available for public use under section 1323 of the Act and HUD regulations. This Final Order does not extend to aggregated information on activities in 1993-95 previously submitted by the GSEs in the Annual Housing Activities Reports, the Mortgage Reports required under 24 C.F.R. 81, subpart E, and the Quarterly and Annual Reports on Interim Housing Goals required under the Notices of Interim Housing Goals, 58 Fed. Reg. 53048, 53071 and 53072, 53095 (Oct. 13, 1993), and the regulation extending such goals into 1995, 59 Fed. Reg. 61504 (Nov. 30, 1994). The information contained in those reports is not proprietary and is available to the public. This Final Order is not applicable to aggregated information on activities in 1996 and thereafter that has been or will be submitted by the GSEs in the Annual Housing Activities Reports and the Mortgage Reports. The nature of this reporting is being determined and the extent to which this information will be deemed proprietary will be determined at an appropriate future date. This Final Order concerns whether loan-level data elements are proprietary. It is not applicable to aggregations of information above the loan-level that the Department may produce for various reasons, including fulfilling its responsibilities to inform the public about the GSEs' activities. The background and terms of this Final Order are set forth below. Background The Federal Housing Enterprises Financial Safety and Soundness Act of 1992, enacted as Title XIII of the Housing and Community Development Act of 1992, (Pub. L. 102-550, approved October 28, 1992), codified generally at 12 U.S.C. 4501-4561 (``the Act''), requires the Secretary of Housing and Urban Development to establish and monitor the performance of Fannie Mae and Freddie Mac in meeting annual goals for mortgage purchases on housing for low- and moderate-income families, housing located in central cities, rural areas, and other underserved areas, and special affordable housing, i.e., housing meeting the needs of and affordable to low-income families in low-income areas and very low-income families. The Secretary established housing goals for 1993 and subsequent years and implemented HUD's regulatory authorities respecting the GSEs in a series of regulations. 58 Fed. Reg. 53047-96 (Oct. 13, 1993) (1993-94 housing goals); 59 Fed. Reg. 61504-06 (Nov. 30, 1994) (1995 housing goals); 24 CFR Part 81 (including housing goals for 1996 and beyond). HUD requires that the GSEs submit quarterly and annually certain data and written information on their mortgage purchases to assist HUD in monitoring the GSEs' performance under the goals and to satisfy the requirements of subsections 309 (m)-(n) of the Fannie Mae Charter Act, 12 U.S.C. 1723a (m)-(n), and subsections 307 (e)-(f) of the Freddie Mac Act, 12 U.S.C. 1456 (e)-(f). These provisions mandate that the GSEs collect, maintain and provide to the Secretary data relating to their mortgages on single family and multifamily housing, and sections 309(n) of the Fannie Mae Charter Act and 307(f) of the Freddie Mac Act further require that the GSEs report aggregate information on their mortgages to both the Secretary and Congress. For 1996 and future years, HUD requires each GSE to provide extensive data and other information on mortgages purchased in two forms--Annual Housing Activities Reports (AHARs) that discuss each GSE's performance under the housing goals, and quarterly Mortgage Reports that include: aggregate data on mortgage purchases; and, in the second and fourth quarter reports, loan-level computerized data files that provide details on each mortgage purchased by each GSE. The data required in the loan-level data files include, for example, for each mortgage purchased by the GSEs: the borrower(s') annual income, race, and gender; census tract location; other geographic identifiers; loan- to-value (LTV) ratio; number of units; owner-occupancy status; and other details on the [[Page 54323]] mortgage, the property, and the borrower(s). The information required for the Mortgage Reports includes, for example, aggregate data concerning: the amount of mortgage purchases that qualify towards each housing goal, classified by number of units and dollar volume; borrower's income; race; location of property; and various other categories. Statutory Requirements and Legislative History Regarding Proprietary Data Section 1323 of the Act, 12 U.S.C. 4543, provides that the Secretary shall make available to the public the data submitted by the GSEs in the data reports required under section 309(m) of the Fannie Mae Charter Act and section 307(e) of the Freddie Mac Act, except the data that the Secretary determines by regulation or order pursuant to section 1326, 12 U.S.C. 4546, is proprietary information. Section 1323(b)(2) of the Act, 12 U.S.C. 4543(b)(2), specifically provides that the Secretary may not restrict access to data consisting of income, census tract location, race, and gender of mortgagors of single family properties. Section 1326 provides that the Secretary may by regulation or order provide that certain information shall be treated as proprietary and, pending the issuance of a final decision on the matter, the information may not be disclosed. The legislative history of the Act provides that ``* * * every effort should be made to provide public disclosure of the information required to be collected and/or reported to the regulator consistent with the exemption for proprietary data * * *.'' S. Rep. 102-282, 102d Cong., 2d Sess. 40 (1992). Previous Orders The Secretary issued a Temporary Order in 1994 providing that certain GSE data was proprietary. 59 Fed. Reg. 29514 (June 7, 1994). The Secretary issued a second Order concerning Proprietary Data of the GSEs as Appendix F of the final GSE regulation, 60 Fed. Reg. 61846, 62001-05 (Dec. 1, 1995), (hereinafter ``second Order''). The second Order identified certain data as proprietary and specified that certain data elements would be categorized into ranges to permit data to be released to the public in a form useful to the public. Under that Order, the GSEs' multifamily loan-level data was to be disclosed in two separate files--a Census Tract File and a National File. Similarly, under that Order, the single family loan-level data was to be disclosed in three separate files--a Census Tract File, including geographic data, and two National Files (National File A and National File B) that excluded the census tract location and other geographic descriptors. The main reason for creating the single family National File A was to develop a method for disclosing LTV ratios in a manner that did not reveal LTV information on mortgage purchases at the census tract level. Both GSEs requested proprietary treatment for LTV information at the census tract level. National File B was to make available to the public occupancy information indicating whether a dwelling unit was owner-occupied, a rental unit in an owner-occupied property, or a rental unit in an investment property. In creating two National Files HUD minimized the likelihood that certain variables can be linked across the National and Census Tract files so that the census tract location could be associated with variables such as LTVs, purpose of the mortgage (purchase, refinancing, or second mortgage), or the date of mortgage notes, which are also proprietary at the census tract level. This multi-file data base structure protects proprietary information, such as information that could reveal local marketing strategies of the GSEs, while permitting the public access to a wide range of GSE data. Changes Included in This Order Based on further review of the second Order and comments provided by the GSEs, the Secretary determined that the issuance of a new Order was required. The Secretary has therefore determined to withhold additional data elements and to reconfigure the files to protect proprietary information from disclosure at the census tract level. By letters dated October 1, 1996, the Secretary has provided notice to the GSEs that certain data elements for which the GSEs requested proprietary treatment are not proprietary information, and that such data shall be made available in the public use data base. Those letters also provided that the mortgage data in the public use data base will not be released to the public for ten working days. Accordingly, the public use data base will be available to the public beginning October 17, 1996. Each of the changes made under this Order, as compared to the second Order, are discussed below. The discussion of the rationale for certain of these changes is limited because further discussion could reveal proprietary information of the GSEs. 1. The single family Census Tract File remains a mortgage-based file, as specified in the second Order. The one change in this file's structure relative to the second Order is the addition to the public use data base of the Geographically Targeted Indicator (field number 55). 2. In the single family Census Tract File, the Area Median Family Income (field number 16) and the Borrower(s) Annual Income (field number 15) will be recoded in some cases to protect proprietary information. In these cases, the Area Median Family Income (field number 16) as submitted by the GSEs will be recoded to the area median income in the year of the mortgage's acquisition by the GSE. In these cases, the Borrower(s) Annual Income (field number 15) also will be adjusted to reflect acquisition year dollars, to maintain the same Borrower Income Ratio (field number 17) between the Borrower(s) Annual Income and the Area Median Family Income. In certain cases where these adjustments cannot be made, in order to protect proprietary information, the Area Median Family Income (field number 16) and the Borrower Income Ratio (field number 17) will be treated as proprietary. In these cases, the Borrower(s) Annual Income (field number 15) will not be adjusted. 3. Single family National File A has been changed to contain only data on owner-occupied one-unit properties, rather than data on all single family properties. The purpose of National File A is to provide LTV ratios in a form that protects proprietary information (that is, the disclosure of LTV ratios with a census tract identifier), while providing researchers with useful information on LTVs for owner- occupied one-unit properties. 4. Single family National File B has been reconfigured from a mortgage file that displays data for up to four units in a single record to a file that displays data for individual units. Accordingly, the affordability information in fields 56, 61, and 66 in the second Order will appear in field 51. The purpose of this change is to protect proprietary information on the GSEs' purchases of mortgages on two- to four-unit properties which is proprietary while permitting the public access to useful information on one- to four-unit GSE mortgage purchases. 5. Single family National File B makes available to the public a revised Borrower Income Ratio (field number 17) for rental dwelling units, which converts the reported rent (the greater of fields number 52 and 53) into an affordability percentage, comparable to the affordability determination in field number 17 for owner-occupants. Inasmuch as data in fields number 52 and 53 are withheld as proprietary, this adjustment of field number 17 for rental [[Page 54324]] units provides the public access to affordability information. In the second Order, the Secretary determined that field number 17 as then recoded was not proprietary for National File B. 6. Single family National File B makes available to the public information on the date of the mortgage note, by indicating (in field number 20) whether a mortgage was originated in the same year as purchased by the GSE or originated in a previous year. In the second Order, the Secretary determined that the date of the mortgage note would be made available only in the single family National File B by indicating whether the mortgage was seasoned or unseasoned. The new approach under this Order to field number 20 protects proprietary information, is consistent with the approach taken under the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq., and allows users of the public use data base to compare GSE data with HMDA data. 7. The Occupancy Code (field number 47) has been revised in the single family National File B. As reported by the GSEs, field number 47 classifies properties as either Principal Residence/Owner Occupied properties or Second Home properties. In National File B, field number 47 will classify each unit as either Owner-Occupied, a Rental Unit in an Owner-Occupied Property, or a Rental Unit in an Investment Property. Field number 50 contains the same owner-occupancy information made available to the public in field number 47 and, therefore, field number 50 is not proprietary. 8. In the multifamily files, the Type of Seller Institution (field number 33) will be made available to the public only in the Census Tract File. Because the release of this information in both the National File and the Census Tract File could permit the release of other proprietary information at the loan-level, the type of seller institution is proprietary information as included in the multifamily National File and will not be made available to the public in that file. 9. The multifamily Tenant Income Indicator (field number 49), which indicates whether the affordability of a particular unit is determined by using the income of the tenant(s) or the rent for the unit, is being made available to the public only in the National File. It is proprietary information as included in the Census Tract File because its release may permit identification of other proprietary information. For 1993-95, this data has been provided only by Freddie Mac. Conclusion The Department is complying fully with the requirements of the Act and will not restrict access to the data submitted to HUD by the GSEs, consisting of income, census tract location, race, and gender of mortgagors of single family properties. Also, in accordance with the Act, the Secretary has considered the GSEs' assertions that certain data is proprietary information and has concluded that revising the second Order is necessary to protect proprietary information. The Act's legislative history noted that ``public access and disclosure of information is a key tool for permitting appropriate public scrutiny and oversight of the activities of the [GSEs] and in evaluating possible improvements in housing finance markets.'' S. Rep. 102-282, 102d Cong., 2d Sess. 44 (1992). On the other hand, the Act also protects proprietary data and information from release. Sections 1323 and 1326 of the Act, 12 U.S.C. 4543 and 4546. The Secretary has considered these matters in issuing this Final Order. Expiration and Modification of this Final Order This Final Order supersedes the second Order, 60 Fed. Reg. 61846, 62001-05 (Dec. 1, 1995), and shall be effective until such time as it is determined necessary or appropriate to withdraw or modify it. Dated: October 1, 1996. Henry G. Cisneros, Secretary. BILLING CODE 4210-32-P [[Page 54325]] [GRAPHIC] [TIFF OMITTED] TN17OC96.000 [[Page 54326]] [GRAPHIC] [TIFF OMITTED] TN17OC96.001 [[Page 54327]] [GRAPHIC] [TIFF OMITTED] TN17OC96.002 [[Page 54328]] [GRAPHIC] [TIFF OMITTED] TN17OC96.003 [[Page 54329]] [GRAPHIC] [TIFF OMITTED] TN17OC96.004 [FR Doc. 96-26380 Filed 10-16-96; 8:45 am] BILLING CODE 4210-32-C