[Federal Register Volume 69, Number 191 (Monday, October 4, 2004)]
[Notices]
[Pages 59476-59488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22049]



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Part III





Department of Housing and Urban Development





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Notice of Final Order; Government Sponsored Enterprises Mortgage Data 
and Annual Housing Activities Report Information: Proprietary 
Information/Public Use Data; Notice

  Federal Register / Vol. 69, No. 191 / Monday, October 4, 2004 / 
Notices  

[[Page 59476]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4796-N-01]
RIN 2502-AH96


Notice of Final Order; Government Sponsored Enterprises Mortgage 
Data and Annual Housing Activities Report Information: Proprietary 
Information/Public Use Data

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing. 
Commissioner, HUD.

ACTION: Notice of final order.

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SUMMARY: This notice sets forth a final order of the Department of 
Housing and Urban Development (HUD or Department) which provides that 
certain loan-level mortgage data elements submitted to HUD by the 
Federal National Mortgage Association (Fannie Mae) and the Federal Home 
Loan Mortgage Corporation (Freddie Mac) (collectively, the government-
sponsored enterprises, or GSEs) are classified as non-proprietary and 
shall be made available to the public. After careful review of the 
previous proprietary orders, the Department is making a number of 
changes to the proprietary classification of certain GSE single-family 
and multifamily mortgage data elements. The list of data elements that 
HUD is making available to the public is described in the following 
sections. In addition, the Department is setting forth in the Appendix 
to this final order the loan-level data elements that the Department 
has determined to classify as proprietary and non-proprietary. The 
final order implements the Department's prior determination that the 
unpaid principal balance (UPB) of mortgages in the single-family Census 
Tract File shall be released, subject to a top-code expressed as a 
ratio to the current conforming loan limit for one-family properties. 
In releasing these data, the Department will use the top-coding 
convention already employed for the years 1993 through 1995. The 
Department will release the reclassified data elements beginning in 
2005, via the Department's public use database covering the GSEs' 2004 
mortgage purchases, and in all future public use databases. Finally, 
the Department is making four technical changes with respect to the 
disclosure of data elements previously determined by HUD to be non-
proprietary. This final order supersedes the final order of October 17, 
1996 (1996 Order).

EFFECTIVE DATE OF THE FINAL ORDER: The Final Order set forth in this 
notice is effective on October 4, 2004.

FOR FURTHER INFORMATION CONTACT: Sandra Fostek, Director, Office of 
Government Sponsored Enterprises Oversight, Office of Housing, Room 
3150, telephone (202)708-2224. For questions on data or methodology, 
contact John L. Gardner, Director, Financial Institutions Regulation 
Division, Office of Policy Development and Research, Room 8212, 
telephone (202) 708-1464. For legal questions, contact Paul S. Ceja, 
Deputy Assistant General Counsel for Government Sponsored Enterprises/
RESPA, and Ronnie Shorenstein, Senior GSE/RESPA Division Attorney, 
Office of the General Counsel, Room 9262, telephone (202) 708-3137. The 
address for all of these persons is Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410. Persons 
with hearing and speech impairments may access the phone numbers 
through TTY by calling the Federal Information Relay Service at (800) 
877-8399.

SUPPLEMENTARY INFORMATION:

A. The Final Order

    Pursuant to sections 1323 and 1326 of the Federal Housing 
Enterprises Financial Safety and Soundness Act (FHEFSSA), codified at 
12 U.S.C. 4543 and 4546, the Department has determined that certain 
loan-level mortgage data elements, as detailed in the attached Appendix 
and contained in the annual loan-level data files that will be 
submitted by Fannie Mae and Freddie Mac to the Department in accordance 
with sections 309(m) and (n) of the Federal National Mortgage 
Association Charter Act (Fannie Mae Charter Act), codified at 12 U.S.C. 
1723a(m) and 1723a(n), and sections 307(e) and (f) of the Federal Home 
Loan Mortgage Corporation Act (Freddie Mac Act), codified at 12 U.S.C. 
1456(e) and 1456(f), respectively, shall be treated as non-proprietary 
information. The Appendix further identifies data elements 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 disclosure under sections 1323 and 1326 of 
FHEFSSA and HUD's regulations at 24 CFR part 81, subpart F.
    This final order concerns whether loan-level data elements are 
proprietary. It is not applicable to aggregated information on 
activities that has been or will be submitted by the GSEs in their 
Annual Housing Activities Reports (AHARs) and Mortgage Reports. 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.
    A detailed discussion of HUD's determinations in this Final Order 
is set forth in Section D below.

B. Background

1. Statutory Requirements and Legislative History Regarding Proprietary 
Data.

    The Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992, enacted as Title XIII of the Housing and Community Development 
Act of 1992, (FHEFSSA) (Pub. L. 102-550, approved October 28, 1992), 
codified generally at 12 U.S.C. 4501-4561, 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 purchases of 
mortgages 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).
    Section 1323 of FHEFSSA, codified at 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 data that the Secretary determines, by regulation or order 
pursuant to section 1326, codified at 12 U.S.C. 4546, are proprietary. 
Section 1323(b)(2) of FHEFSSA, codified at 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.
    In addition, section 1326 of FHEFSSA provides that the Secretary 
may, by regulation or order, provide that certain information shall be 
treated as proprietary information and not subject to disclosure under 
section 1323 of FHEFSSA, section 309(n)(3) of the Fannie Mae Charter 
Act or section 307(f)(3) of the Freddie Mac Act. Section 1326 of 
FHEFSSA also states that the Secretary shall not provide public access 
to, or disclose to the public, any information required to be submitted 
by a GSE under section 309(n) of the Fannie Mae Charter Act or section 
307(f) of the Freddie Mac Act that the Secretary determines is 
proprietary. Pending the issuance of a final decision on the matter, 
such

[[Page 59477]]

information may not be disclosed to the public or a representative of 
any person or agency.
    The legislative history of FHEFSSA 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). In addition, the legislative history 
indicates that Congress intended that the GSE public use database help 
fill the ``information vacuum'' on GSE mortgage activities and 
complement the database established under the Home Mortgage Disclosure 
Act (HMDA) (see S. Rep. 102-282, 102d Cong., 2d Sess. 33, 39 (1992).)

2. Regulatory and Administrative Actions.

    On October 13, 1993, the Department published in the Federal 
Register Notices of Interim Housing Goals which required, among other 
things, that each GSE provide data and other information on mortgages 
purchased, in the form of Annual and Quarterly Reports, on their 
respective performance under the Interim Housing Goals, and, after the 
end of each year, loan-level computerized data files providing details 
on each mortgage purchased (see 58 FR 53048 for Fannie Mae and 58 FR 
53072 for Freddie Mac).
    On June 7, 1994, the Department published in the Federal Register a 
Notice of Temporary Order that identified certain information contained 
in the GSEs' loan-level data files submitted to HUD that the Department 
had determined to be proprietary information (see 59 FR 29514) (the 
1994 Temporary Order). The 1994 Temporary Order identified, in its 
Exhibit A, the specific loan-level data elements that were covered by 
the Temporary Order and provided that these data elements were to be 
withheld from public disclosure. The Department solicited public 
comments in connection with this Temporary Order and indicated that it 
would consider these comments during its development of a subsequent 
proposed rulemaking to implement its statutory authority under FHEFSSA.
    As part of its 1995 proposed and final rules to establish 
regulations governing the GSEs, the Department developed regulations 
governing the use of the public use database to make available to the 
public loan-level data on the GSEs' single-family and multifamily 
mortgage purchases.
    In the Department's December 1, 1995 final GSE rule (1995 Final 
Rule) (60 FR 61846, 61897-8) which implemented the Secretary's GSE 
regulatory authorities, HUD required, for 1996 and future years, each 
GSE to provide 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 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 
about the mortgage, the property, and the borrower(s). The information 
required for the Mortgage Reports includes 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 and race; location of property; and various other categories. 
(See 24 CFR part 81, subpart E.)
    In addition, the Department's regulation at 24 CFR 81.74, set forth 
in the 1995 Final Rule, established six factors for the Secretary to 
consider and procedures to be followed when the Secretary determines 
whether or not to accord proprietary treatment to mortgage data or AHAR 
information.

    Section 81.75, which was set forth in the 1995 Final Rule 
provided, in part, that:
Following a determination by the Secretary that mortgage data or 
AHAR information is proprietary information under FHEFSSA, the 
Secretary shall expeditiously issue a temporary order, final order, 
or regulation withholding the mortgage data or AHAR information from 
the public use database and from public disclosure by HUD in 
accordance with 12 U.S.C. 4546.

    Section 81.75 further provided that the Secretary ``may, from time-
to-time, by regulation or order, issue a list entitled `GSE Mortgage 
Data and AHAR Information: Proprietary Information/Public-Use Data' 
providing that certain information shall be treated as proprietary 
information'' and expressly authorized the Secretary to ``modify the 
list by regulation or order.''
    The Department set forth in Appendix F to the 1995 Final Rule a 
final order identifying the list of data elements that HUD had 
determined under section 1326 of FHEFSSA to be proprietary (and, thus, 
not available to the public) and those data elements that it had 
determined to be non-proprietary and available to the public. (See 60 
FR 62001-62005.) The 1995 Final Rule stated that Appendix F contained 
the most current listing of data and information determined by HUD to 
be proprietary and that it superseded the 1994 Temporary Order.
    The 1995 Final Rule also identified in Appendix F the structure of 
the public use database, including that GSE single-family data would be 
released to the public in three separate files: a Census Tract File 
that identified the census tract location of the mortgaged property, a 
National File A (with mortgage-level data on owner-occupied one-unit 
properties but without census tract identifiers), and a National File B 
(with unit-level data on all single-family properties also without 
census tract identifiers). The GSE multifamily data are disclosed in 
two files, the Census Tract File, which identifies the census tract 
location of the mortgaged property and the National file, which does 
not identify the location of mortgaged properties but contains mortgage 
level data and unit class level data on all multifamily properties.
    In 1996, based upon a review of the 1995 order and comments 
provided by the GSEs, HUD determined that the issuance of a new order 
was needed. Therefore, on October 17, 1996, the Department issued a new 
order (see 61 FR 54322) (1996 Order) releasing some new data and 
reconfiguring files to protect proprietary information. In the 1996 
Order, the Department's changes included the following: For the single-
family files: (1) Add an indicator for served or underserved areas to 
the Census Tract File; (2) in certain cases recode area median family 
income and borrower(s) annual income to protect proprietary information 
in the Census Tract File; (3) specify properties included in National 
File A and the presentation of unit-level information in National File 
B; (4) recode the borrower income ratio for rental units in National 
File B to provide the public with affordability information; (5) 
provide information on whether mortgages were originated in the same or 
a previous year, consistent with HMDA, in National File B; and (6) 
revise the reporting of the occupancy code in National File B. For the 
multifamily files, release the type of seller institution in the Census 
Tract File, and release data on the affordability of units in the 
National File.
    Subsequently, as part of its GSE housing goals proposed rule of 
March 9, 2000 (65 FR 12660) (the 2000 Proposed Rule), the Department 
included several additional changes to its classifications of certain 
GSE mortgage data. As part of

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this rulemaking, HUD proposed to treat as non-proprietary, and to 
release to the public, the following single-family data elements:
    (1) A code distinguishing loans on properties in metropolitan areas 
from loans on properties in non-metropolitan areas in the two single-
family National Files;
    (2) A code distinguishing home purchase, refinance, second, and 
rehabilitation loans in the single-family Census Tract File and 
National File A;
    (3) An identifier for federally guaranteed loans (with type of 
guarantee) in the single-family Census Tract File;
    (4) Identification of the borrower's and co-borrower's race/
national origin in the two single-family National Files; and
    (5) A code distinguishing owner-occupied from investor properties 
in the single-family Census Tract File and National File A.
    In addition, HUD proposed two changes to the GSE multifamily files 
that would allow the release to the public of:
    (1) A code in the National File that would distinguish loans 
originated in the year of purchase by the GSE from loans originated in 
prior years; and
    (2) A code in the National File identifying the type of seller 
institution.
    HUD also proposed four technical recoding and definitional changes 
concerning: (1) the borrower(s) annual income in the single-family 
database; (2) the Purpose of Loan in the Census Tract File; (3) the 
Purpose of Loan in the multifamily database; and (4) the Occupancy Code 
in the single-family database. (See Section 1.C. of the 2000 Proposed 
Rule, 65 FR 12668-12670.)
    In the final GSE rule that HUD published on October 31, 2000 (65 FR 
65044) (the 2000 Final Rule), HUD decided not to make a final 
determination with regard to which GSE data elements would be 
designated as proprietary or non-proprietary. Instead, the Department 
decided, after referencing its authority under section 1326 of FHEFSSA 
and Sec.  81.75 of its regulations, that it would issue an order 
setting forth its determinations regarding the proprietary or non-
proprietary status of the subject data elements following publication 
of the 2000 Final Rule. The Department stated that its decision would 
be issued in accordance with its regulations at Sec. Sec.  81.72 to 
81.74. (See 65 FR 65801-65802.)
    In 2003, the Department prepared and submitted to the Office of 
Management and Budget (OMB) a draft final order in which it stated 
determinations with respect to each of the changes that it had proposed 
in the 2000 Proposed Rule (the Draft Final Order). The Department also 
included in the Draft Final Order items that were not discussed in the 
2000 proposed rulemaking, including:
    (1) The designation as non-proprietary in National Files A and B of 
the borrower's and co-borrower's gender (information which previously 
was made available in the National files only as a combined borrower/
co-borrower data element); and
    (2) Increasing the top-coding of the unpaid principal balance (UPB) 
of mortgage loans at the time of acquisition by a GSE to reflect 
increases in the conforming loan limit.
    In May 2003, the GSEs requested a copy of the Department's 
submission to OMB and, in response, the Department provided Fannie Mae 
and Freddie Mac with a copy of the list of proprietary and non-
proprietary determinations from its Draft Final Order (the 2003 List). 
The 2003 List reflected the Department's initial views about the 
proprietary and non-proprietary status of each of the data elements 
that had been included in the 2000 Proposed Rule, as well as items (1) 
and (2) above.
    In May 2003 HUD representatives met separately with Fannie Mae and 
Freddie Mac staff to discuss the proposed treatment of the data 
elements in the 2003 List. The Department informed the GSEs that they 
could each submit written comments reflecting the views that they had 
expressed at the May 2003 meetings. On June 24, 2003, the GSEs 
submitted written comments. The Department has reviewed and considered 
these comments.
    As described further below, the Department has concluded that the 
GSE data elements that were identified in the 2000 Proposed Rule and 
2003 administrative proceedings, when released in certain files and 
with certain modifications as described below, may be treated as non-
proprietary and may be released to the public via the public use 
database.

C. Public Comments on the 2000 Proposed Rule and the 2003 List

    In making its determinations, the Department considered the public 
comments submitted on the 2000 Proposed Rule and the GSEs' comments 
(described below) on the 2003 List. HUD received comments on the 2000 
Proposed Rule from both GSEs and from trade organizations, advocacy 
groups, researchers, and lenders. The Department discussed the comments 
in the 2000 Final Rule (see 65 FR 65044, 65081-65082) and incorporates 
that discussion herein. The Department is further discussing, in this 
final order, Freddie Mac's comments on the 2003 List.
    Freddie Mac asserted that a portion of its June 24, 2003, comment 
letter is confidential and proprietary. In this final order, the 
Department discusses only those Freddie Mac comments that were not 
designated as proprietary. Fannie Mae asserted that the entire contents 
of its June 24, 2003, comment letter are confidential and proprietary.
    Although the Department fully considered all the comments raised by 
the GSEs in their June 24, 2003 letters, due to the confidentiality 
concerns raised by the GSEs regarding those letters, only those 
portions of Freddie Mac's comments that it has not designated as 
confidential and proprietary are discussed herein. Because Fannie Mae 
requested confidential treatment of all issues raised in its comments, 
the Department has considered, but is not discussing, these comments in 
this final order.
    Prior to publication of this final order, the Department sent to 
the GSEs a copy of this final order, together with separate 
determination letters in which the Department responded to the comments 
that each GSE contended are confidential and proprietary.
    In its comments on the 2003 List, Freddie Mac asserted that the 
Department's administrative process for changing the treatment of the 
items of proprietary data in the 2003 List was inadequate. Freddie Mac 
agreed that the Department could modify its designations of proprietary 
and non-proprietary data in the public use database by regulation or 
order, but stated that neither the process for a regulation nor for an 
order had been followed. Freddie Mac did not elaborate further on the 
process it considered proper for issuing an order.
    The Department has considered Freddie Mac's comments relating to 
the administrative process it used in making the determinations set 
forth in this final order and has determined that it followed the 
appropriate administrative process under section 1326 of FHEFSSA, HUD's 
regulations at 24 CFR 81.74 and 81.75, and the Administrative Procedure 
Act. The Department has provided various opportunities to the GSEs to 
have their views considered during both the 2000 and 2003 
administrative proceedings, and the GSEs did, in fact, avail themselves 
of each of these opportunities by submitting written comments and 
meeting with HUD representatives. Moreover, the Department has fully 
considered the GSEs' oral and written comments. Accordingly, the 
Department

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believes that the administrative process it has afforded the GSEs fully 
satisfies the requirements and procedural protections afforded in its 
regulations and in the Administrative Procedure Act.
    HUD's determinations, including a specific discussion of each 
change to the 1996 Order, are set forth below in Section D.

D. Changes Included in This Order

    The Department is issuing this final order setting forth its 
determinations of proprietary and non-proprietary status with respect 
to the data element changes HUD proposed in its 2000 Proposed Rule, and 
the two additional items proposed by the Department in the 2003 List. 
The following section sets forth HUD's determinations and how those 
determinations change the 1996 Order.
    In making its determinations, HUD has considered all of the the 
public and non-public comments regarding its proposed changes to the 
public use database, and acted pursuant to its regulations at 24 CFR 
81.71-81.75. Further, in making its determination, the Department 
specifically employed the six factors listed for making proprietary 
determinations of mortgage data or AHAR information set forth in 24 CFR 
81.74(b), including a consideration of any effect that disclosure of 
GSE data may have on the GSEs' financial or competitive positions. In 
this final order, the Department is making the following changes to the 
treatment of the following single-family loan level data elements:

1. Treatment of Single-Family Data

1. MSA Code/Metropolitan and Non-Metropolitan Location
    In the 2000 Proposed Rule, HUD proposed to add an identifier to 
National Files A and B that would identify only whether a mortgaged 
property is located in a metropolitan area or is located in a non-
metropolitan area, or that the information is missing, without 
revealing the specific Metropolitan Statistical Areas (MSAs) of the 
property by disclosing the MSA code. MSA Codes for specific MSAs will 
continue to be available only in the Census Tract File.
    HUD has determined that its proposal should be implemented and that 
data identifying whether a property is in a metropolitan or non-
metropolitan area should not be accorded proprietary treatment in the 
National Files. The incremental amount of information made available to 
the public through the release of metropolitan/non-metropolitan data is 
necessary in order to accurately characterize GSE purchases, to fully 
understand the ability of the GSEs to lead the mortgage market, and to 
help to fill the ``information vacuum'' related to the GSEs'' mortgage 
purchase activities as noted by Congress when it enacted FHEFSSA in 
1992.
    In addition, separately identifying data on metropolitan and non-
metropolitan activities of the GSEs is of critical importance in order 
to accurately compare the GSEs to the primary mortgage market. By 
allowing analysis of the GSEs' purchases of mortgages on properties in 
metropolitan areas, as opposed to non-metropolitan areas, HUD's release 
of this data would allow comparisons with market data, reported in 
accordance with HMDA, which contain information on newly originated 
mortgages in metropolitan areas at the census tract level. National 
File B also separates the GSEs' mortgage purchases into prior-year and 
current-year originations. The market analysis, comparing GSE purchases 
with HMDA-reported originations in the primary market, will allow HUD 
and others to accurately evaluate GSE leadership capabilities relative 
to the conventional conforming mortgage market, one of the statutory 
factors that Congress mandated that HUD consider in setting the housing 
goals.
2. Purpose of Loan
    In the 2000 Proposed Rule, HUD proposed to add Purpose of Loan to 
the Census Tract File and National File A by releasing data on whether 
a mortgage was for home purchase, refinance, or was a second mortgage. 
HUD further proposed to add a previously unreleased indicator for 
rehabilitation loans to the coded values of Purpose of Loan, and to 
redefine code ``9'' as ``information not applicable/not available.''
    HUD has determined not to accord proprietary treatment to Purpose 
of Loan data if Purpose of Loan data are released in the Census Tract 
File and National File A in two categories, either ``home purchase'' or 
``all other'', the latter of which would include refinance, second, and 
rehabilitation mortgages combined into one element. For National File 
B, the public use database would retain the existing level of detail, 
although an additional element would be provided to indicate whether a 
loan is a code 4, which indicates rehabilitation loans. The public use 
database will redefine code 9 from ``Not Applicable'' to ``Not 
Applicable/Not Available.''
    By making these changes, the Census Tract File and National File A 
of the public use database will clearly identify home purchase 
mortgages, which are central to the GSEs' missions and important to the 
formulation of regulatory policy toward the GSEs while addressing any 
concerns relating to the public release of this information. Meanwhile, 
National File B of the public use database will continue to report 
greater detail on loan purpose, including information on second 
mortgages and rehabilitation loans.
    The need to distinguish home purchase loans in the Census Tract 
File has been conveyed to HUD by researchers who have attempted to use 
the GSE public use database in conjunction with HMDA data (which 
separately identifies home purchase and refinance loans). These 
researchers indicate that the usefulness of the Census Tract File is 
severely limited because it does not separately identify home purchase 
loans.
    The level of down payment is a major factor in determining access 
to homeownership for lower-income families. With respect to National 
File A, separately identifying the distribution of home purchase loans 
across LTVs would allow users of the public use database to perform 
analyses of the GSEs' contributions to homeownership opportunities for 
those lower-income families that find it most difficult to raise cash. 
Such identification would permit the public to consider whether the 
GSEs are purchasing sufficient low down payment loans to serve the 
needs of lower-income borrowers. Currently, questions such as these 
cannot be answered using the GSE public use database. Including Purpose 
of Loan in National File A will enable HUD and others to analyze the 
GSEs' contributions to expanding homeownership opportunities.
3. Federal Guarantee
    Federal Guarantee is already disclosed in National Files A and B. 
HUD proposed to add it to the Census Tract File. This data element 
identifies whether the loan is a Federal Housing Administration (FHA) 
loan or Veterans Administration (VA) loan, a Rural Housing Service 
(RHS) guaranteed rural housing loan, a home equity conversion mortgage 
(HECM), a Title I-FHA loan, or a loan without any federal guarantee. 
Federal Guarantee (FHA, VA, RHS) is disclosed in the HMDA database.
    HUD has determined that proprietary restrictions will not be 
violated if the Census Tract File reports the Federal Guarantee in one 
of three categories--``FHA/VA,'' ``other federal guarantee,'' or ``no 
federal guarantee.'' HUD has

[[Page 59480]]

determined that its proposal should be implemented and data identifying 
``federal guarantee,'' as described herein, should not be accorded 
proprietary treatment in the Census Tract File.
    HUD previously determined in the 1996 Order that the Federal 
Guarantee data element specifying whether a loan is an FHA or a VA 
loan, an RHS-guaranteed rural housing loan, a HECM, a Title I FHA loan, 
or a loan without any federal guarantee, is not proprietary when 
released in the National Files A and B, as specified in that Order. On 
the other hand, HUD also determined, with regard to the Census Tract 
File, that this element is proprietary. However, since HMDA does make 
available to the public information on whether current year loans are 
conventional, FHA, VA, or RHS, the Department believes that a 
revocation of its prior proprietary determination with regard to the 
Census Tract File is warranted.
    The public benefit of being able to distinguish FHA/VA, Other 
Federal Guarantee and No Federal Guarantee loans by geographical 
location is substantial. As noted earlier, HMDA reports such 
information for most loans originated in the primary market in 
metropolitan areas and for most loans sold to the GSEs. This addition 
to the Census Tract File will make the data in that file consistent 
with the primary market data reported by HMDA. By including the Federal 
Guarantee information in the Census Tract File, HUD will enable users 
of the GSE public use database to analyze the GSEs' mortgage purchases 
with more precision.
4. Race/National Origin
    Section 1323(b)(2) of FHEFSSA, codified at 12 U.S.C. 4543(b)(2), 
provides that the Secretary shall not restrict access to certain data 
elements listed in the GSEs' respective Charter Acts; these data 
elements include the race of mortgagors. The race/national origin of 
the borrower and co-borrower are already made public in the Census 
Tract File. This data element also includes designations for why 
information is not available. The race/national origin of the borrower 
and co-borrower are also made public in National Files A and B as a 
combined data element which presents data on the race/national origin 
of the borrower and co-borrower, including whether they are of a 
different race/national origin from each other. There is no designation 
for why information is missing in National Files A and B.
    In the 2000 Proposed Rule, HUD proposed to change the presentation 
in National Files A and B to provide a separate race/national origin 
data element for the borrower and co-borrower, and to detail reasons 
for missing race data currently provided only in the Census Tract File 
(specifically whether information was not provided by the applicant in 
a mail or telephone application, the field is not applicable, or the 
information is not available). HUD has determined that its proposal 
should be implemented and that data identifying ``race/national 
origin,'' as described herein, should not be accorded proprietary 
treatment in National Files A and B.
    HUD previously determined in the 1995 Final Rule, and reaffirmed in 
the 1996 Order, that the race/national origin data element is non-
proprietary when released for the borrower and co-borrower in the 
Census Tract File, and that combined race/national origin data for both 
the borrower and co-borrower are non-proprietary in the form in which 
these have been released in the National Files A and B. Thus, the 
Department has not previously made available to the public, via the 
public use database, separate data on race/national origin for the 
borrower and the co-borrower in National Files A and B. However, since 
HMDA does make available to the public separate data on the race/
national origin of the borrower and the co-borrower, as does the Census 
Tract File, the Department believes that a revocation of its prior 
proprietary determination is warranted.
5. Gender of the Borrower and Co-Borrower
    Section 1323(b)(2) of FHEFSSA, codified at 12 U.S.C. 4543(b)(2), 
provides that the Secretary shall not restrict access to certain data 
elements listed in the GSEs' respective Charter Acts. These data 
elements include the gender of single-family mortgagors. The gender of 
the borrower and co-borrower are already present in the Census Tract 
File, and as a combined data element in National Files A and B. There 
is no designation for why information is missing in National Files A 
and B.
    HUD is now changing the presentation in National Files A and B to 
provide borrower and co-borrower information separately. In addition, 
HUD will include in National Files A and B additional information on 
the reasons why data are missing, i.e., information was not provided by 
the applicant in mail or telephone application, the field is not 
applicable, or the information is not available. This information 
currently is provided only in the Census Tract File. HUD has determined 
that this change should be implemented and that data identifying the 
gender of the borrower and co-borrower, as described herein, should not 
be accorded proprietary treatment in the National Files A and B.
    The disclosure, on a disaggregated basis in the National Files, of 
separate gender information for borrowers and co-borrowers, would not 
affect the financial or competitive position of either GSE. As noted 
above, the two National Files already report gender information on an 
aggregated basis (combining the primary borrower and co-borrower 
information). The Department would be providing separate gender 
information for the borrower and the co-borrower in the form in which 
gender information is already provided in the Census Tract File.
    HUD previously determined in the 1996 Order that gender qualifies 
for proprietary treatment when released in the form of separate 
borrower and co-borrower gender data elements in the two National 
Files. As a result, the Department has not previously made this 
information available to the public via the public use database. 
Information on the gender of the borrower and co-borrower for GSE-
purchased loans is readily available from the Census Tract File (for 
all single-family loans) and from HMDA (for most home purchase and 
refinance loans sold to the GSEs).
    The Department's release of separate information on borrower and 
co-borrower race/national origin (as discussed in the preceding 
section) will have the effect of revealing, in National Files A and B, 
information on whether the number of borrowers is one or at least two. 
Given this information with the existing combined borrower/co-borrower 
gender data element, the level of gender information in National Files 
A and B will become substantively equivalent to the level of gender 
information provided if the borrower and co-borrower information are 
provided separately. (In some cases there are three or more borrowers; 
information on the total number of borrowers for a loan will continue 
to be excluded from the GSE public use database.) To make this as clear 
as possible for users of the public use database, HUD will code 
borrower and co-borrower information separately as is done with HMDA 
data.
    For these reasons, HUD has determined that it is appropriate to 
release this augmented disclosure of information on gender in the 
National Files.

[[Page 59481]]

6. Top-Coding of Unpaid Principal Balance (UPB)
    The Department uses ``top-coding'' in the public use database to 
present the maximum unpaid principal balance of a mortgage at the time 
of acquisition by a GSE as a number less than the conforming loan 
limit. In this way, users of the public use database can gain 
information on the unpaid principal balance of GSE mortgage purchases 
without being able to discern whether a unit is a one-unit or a two-to-
four unit property. The top-code for a single-family mortgage is 
calculated by applying a fixed ratio to the conforming loan limit.
    The first year for which HUD collected proprietary data on UPB was 
1993, when the conforming loan limit for one-unit properties (except in 
Alaska and Hawaii) was $203,150. For that year, HUD top-coded UPB at 
$200,000, or 98.45 percent of the conforming loan limit.
    Under the 1994 Temporary Order, UPB was designated as proprietary 
and not released. Under Appendix F of the 1995 Rule, data on UPB were 
allowed to be released as either less than or greater than $200,000 in 
the single-family Census Tract File, but not in National File A or B. 
The 1996 Order did not change the treatment of this data element.
    After the 1996 Order was published, HUD released UPB data, top-
coded at $200,000 for the years 1993 through 1995. For subsequent 
years, HUD has continued to apply a $200,000 top-code, even as the 
conforming loan limit has risen. For 2004, with a conforming loan limit 
of $333,700, a $200,000 top-code means that information on the 
distribution of UPB that HUD has asserted to be relevant for public 
purposes and non-proprietary is being masked.
    Accordingly, HUD will henceforth adjust annually the top-code UPB 
for all single-family properties by applying the fixed ratio (200/207) 
to the then-current single-family conforming loan limit. Therefore, 
consistent with the top-coding convention already employed for 1993 
through 1995, HUD is ordering the top-coding convention for each year 
to be 98.4 percent of the conforming loan limit, rounded to the nearest 
$500. This will result in a top-code for the year 2004, in which the 
conforming loan limit is $333,700, of $328,500.
    HUD has determined that there is no adverse consequence from 
annually re-specifying the top-code of UPB, as it only restores the 
level of disclosure established in the Final Order that is set forth in 
Appendix F to the 1995 Final Rule and in the 1996 Order. HUD previously 
determined in those Orders that the Acquisition UPB data element 
qualifies for proprietary treatment, but may be released to the public 
after applying top-coding to this data. In those Orders, the Department 
indicated that the purpose of top-coding was to mask two-to four-unit 
properties by combining them with one-unit properties within 
approximately 1.5 percentage points below the conforming loan limit. 
Over time, the top-code set in 1996 has decreased to 59.93 percent of 
the conforming loan limit in 2004, as the conforming loan limit has 
risen.
    Because the Department has already determined that the Acquisition 
UPB data element can be released to the public when a top-code is 
applied, and since the effect of the current modification is limited to 
adjusting the top-code to reflect annual changes in the conforming loan 
limit, the Department believes this clarification of HUD's prior 
proprietary determination is warranted.
7. Occupancy Code
    Occupancy Code (identifying whether the unit is owner-occupied, a 
rental unit in an owner-occupied property, a unit in an investment 
property, or information not available) is already provided in National 
File B of the public use database. In the 2000 Proposed Rule, HUD 
proposed to add this data element to the Census Tract File and to 
National File A (identifying whether the property is owner-occupied, is 
an investment property, or that the information is not available). The 
Census Tract File currently does not distinguish mortgages on owner-
occupied properties from mortgages on investor-owned properties. 
Separately identifying mortgages on owner-occupied and investor-owned 
properties in the Census Tract File of the public use database would 
make the Census Tract File comparable with HMDA, which distinguishes 
between mortgages on owner-occupied and non-owner-occupied properties. 
This change would permit comparison of the GSEs' purchases of mortgages 
on owner-occupied properties with HMDA-reported mortgages on owner-
occupied properties originated in the conventional conforming primary 
market. (In the public use database second homes are included in the 
``owner-occupied'' category while in HMDA they are included in the 
``non-owner-occupied'' category.)
    HUD has determined that its proposal should be implemented and that 
occupancy code information in the Census Tract File should not be 
accorded proprietary treatment. HUD previously determined in the 1996 
Order that the Occupancy Code data element is not proprietary in 
National File B when recoded to mask whether the property is the second 
home, but that the data element is accorded proprietary treatment in 
the Census Tract File and National File A. However, since HMDA does 
make available to the public the occupancy code data element, and for 
the other reasons set forth in this final order, the Department 
believes that a revocation of its prior proprietary determination with 
respect to the Census Tract File is warranted. (HUD has further 
determined that because National File A contains only mortgage data on 
owner-occupied one-unit properties, release of information on investor-
owned properties is not applicable to this File.)
    Under HMDA, lenders report information for most loans originated in 
the primary market in metropolitan areas and for most loans sold to the 
GSEs. This addition to the single-family Census Tract File would make 
the data in that file consistent with the primary market data reported 
by HMDA, thus allowing for comparisons of the characteristics of loans 
on owner-occupied properties that are originated in the primary market 
and loans that are bought by the GSEs. This would provide a better 
understanding of the role of the GSEs in purchasing mortgages in the 
owner-occupied portions of the metropolitan housing markets. In 
addition, single-family rental properties provide an important source 
of financing for low-income housing, particularly in inner cities, but 
more needs to be known about the GSEs' activities in this important 
market. For these reasons, the public benefit of being able to 
distinguish, by geographical location, between mortgages on owner-
occupied and investor-owned properties is substantial.

2. Treatment of Multifamily Data

    Under the 2000 Proposed Rule, HUD proposed to add the following 
data elements to the GSE public use database for multifamily 
properties:
1. Date of Mortgage Note
    Date of Mortgage Note was proposed by HUD in the 2000 Proposed Rule 
to be released in the multifamily National File only, showing whether 
the mortgage was originated in the same year as acquired by the GSE, or 
in a prior year, or whether this information is missing.
    HUD has determined that its proposal should be implemented and that 
data on the Date of Mortgage Note in the

[[Page 59482]]

multifamily National File should not be accorded proprietary treatment.
    HUD previously determined in the 1996 Final Order that the Date of 
Mortgage Note data element qualifies for proprietary treatment in both 
the Census Tract File and the National File. As a result, the 
Department has not previously made this information available to the 
public via the public use database. However, since HMDA does make 
available to the public the Date of Mortgage Note data element, the 
Department believes that a revocation of its prior proprietary 
determination is warranted. This will permit public analyses of GSE 
purchases of multifamily loans originated in prior years and also 
facilitate comparisons between data in the GSE public use database and 
HMDA data.
2. Type of Seller Institution
    Type of Seller Institution (showing whether the loan seller is a 
mortgage company, Savings Association Insurance Fund (SAIF)-insured 
depository institution, Bank Insurance Fund (BIF)-insured depository 
institution, National Credit Union Administration (NCUA)-insured credit 
union, or some other type of institution) is already provided to users 
in the Census Tract File of the public use database. In the 2000 
Proposed Rule, HUD proposed to release this information in the National 
File as well.
    HUD has determined that data on the Type of Seller Institution in 
the National File should not be accorded proprietary treatment and that 
its proposal should be implemented with one change: SAIF-insured 
depository institution and BIF-insured depository institution will be 
recoded as a combined data element in the National File.
    HUD previously determined in the 1996 Order that the Type of Seller 
Institution data element is not proprietary when released in the Census 
Tract File and is proprietary when released in the National File. As a 
result, the Department has not previously made this information 
available to the public via the public use database. However, since 
HMDA does make available to the public the Type of Seller Institution 
data element, the Department believes that a revocation of its prior 
proprietary determination is warranted. This will facilitate 
comparisons between data contained in the GSE and HMDA databases and 
will also facilitate analyses by members of the public of 
affordability, property and size characteristics, as well as other key 
characteristics by type of seller at the national level.

E. Other Technical Changes

    In the 2000 Proposed Rule, HUD proposed the following additional 
changes, of a minor technical or definitional nature, to the public use 
database:

1. Borrower(s) Annual Income

    HUD proposed to change the ``not available'' code for borrower(s) 
annual income from ``999999'' to ``9999999.'' No objection was raised 
to this change. Accordingly, it will be implemented.

2. Purpose of Loan--Single-Family

    HUD proposed to add code ``4'' for rehabilitation loans as a code 
under Purpose of Loan in the single-family GSE public use database, and 
to change code ``9'' from ``not applicable'' to ``not applicable/not 
available.'' No objection was raised to this change. Accordingly, it 
will be implemented.

3. Purpose of Loan--Multifamily

    HUD proposed to change code ``9'' under Purpose of Loan in the 
multifamily GSE public use database from ``not applicable'' to ``not 
applicable/not available.'' No objection was raised to this change. 
Accordingly, it will be implemented.

4. Occupancy Code in National File A

    In the preamble to the 2000 Proposed Rule, HUD proposed that 
Occupancy Code be disclosed in National File A. In seeming 
contradiction to this proposal, HUD's matrix in Appendix E to the 2000 
Proposed Rule indicated that this data element would continue not to be 
disclosed. The issue is, however, substantively immaterial given that 
National File A is limited to mortgages on owner-occupied one-unit 
properties, all of which would have an Occupancy Code of ``1'' under 
the proposal. In order to economize on space in the data file, and 
since the code is unnecessary, HUD will continue to omit this data 
element from National File A.

F. Summary of Revised Public Use Database Structure

    An appendix is attached to this Final Order that summarizes the 
structure of the single-family and multifamily GSE public use database 
files incorporating the changes that will be implemented based on HUD's 
determinations in this Final Order. For GSE single-family mortgage 
data, changes are reflected in data fields 4, 15, 18, 22, 27, 41, 42, 
43, 44, and 47. For GSE multifamily mortgage data, changes are 
reflected in data fields 19, 21, and 33.

Conclusion

    The Department is complying fully with the requirements of FHEFSSA 
and will not restrict access to the data submitted by the GSEs to HUD 
under sections 309(m) and (n) of the Fannie Mae Charter Act and 
sections 307(e) and (f) of the Freddie Mac Act, other than as described 
in this final order and the attached Appendix. Also, the Department has 
considered the assertions of the GSEs and other commenters that certain 
data should be treated as proprietary and has concluded that revising 
the 1996 Order is necessary to release GSE information that is reported 
to HUD to the public, to complement the HMDA database, and to fill the 
``information vacuum'' on GSE mortgage purchase activities, while at 
the same time protecting the GSEs' proprietary information, in 
accordance with FHEFSSA and its legislative history.
    Pursuant to sections 1323 and 1326 of FHEFSSA, codified at 12 
U.S.C. 4543 and 4546, and HUD's regulations at 24 CFR part 81, the 
Department has determined that certain loan-level mortgage data 
elements, as detailed in the attached Appendix and contained in the 
annual loan-level data files submitted by Fannie Mae and Freddie Mac to 
the Department in accordance with sections 309(m) and (n) of the Fannie 
Mae Charter Act (12 U.S.C. 1723a(m) and 1723a(n)) and sections 307(e) 
and (f) of the Freddie Mac Act (12 U.S.C. 1456(e) and 1456(f)), shall 
not be accorded proprietary treatment and shall be made available for 
public use via the public use database established by section 1323 of 
FHEFSSA. The Appendix further identifies those data elements for which 
HUD has made these determinations.
    Finally, this final order provides that the Department also will 
revise the top-coding convention on the unpaid principal balance (UPB) 
of mortgages in the single-family Census Tract File beginning with the 
year 2004 and consistent with the top-coding convention already 
employed for the years 1993 through 1995.
    The Department will release the reclassified data elements, as set 
forth in this Final Order, beginning in 2005, through the Department's 
public use database covering the GSEs' 2004 mortgage purchases, and in 
all future public use databases.
    The Department also has determined to make the technical changes to 
its implementation of the public use database, as originally described 
in the 2000 Proposed Rule and as described in

[[Page 59483]]

this final order. These technical changes will take effect immediately.

Expiration and Modification of this Final Order

    This final order supersedes the final order of October 17, 1996 (61 
FR 54322) and shall be effective until such time as the Department 
determines that it is necessary and/or appropriate to withdraw or 
modify it.

    Dated: September 28, 2004.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner.
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[FR Doc. 04-22049 Filed 10-01-04; 8:45 am]
BILLING CODE 4210-27-C