[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]



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Part III





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Secretary



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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  

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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.

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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

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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

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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.

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[FR Doc. 96-26380 Filed 10-16-96; 8:45 am]
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