[Federal Register Volume 81, Number 249 (Wednesday, December 28, 2016)]
[Notices]
[Pages 95596-95612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31386]


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FEDERAL HOUSING FINANCE AGENCY

[No. 2016-N-16]


Proposed Collection; Comment Request

AGENCY: Federal Housing Finance Agency.

ACTION: 30-Day Notice of submission of information collection for 
approval from Office of Management and Budget.

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SUMMARY: In accordance with the requirements of the Paperwork Reduction 
Act of 1995, the Federal Housing Finance Agency (FHFA or the Agency) is 
seeking public comments concerning the information collection known as 
the ``National Survey of Mortgage Originations'' (NSMO), which has been 
assigned control number 2590-0012 by the Office of Management and 
Budget (OMB) (the collection was previously known as the ``National 
Survey of Mortgage Borrowers''). FHFA

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intends to submit the information collection to OMB for review and 
approval of a three-year extension of the control number, which is due 
to expire on December 31, 2016.

DATES: Interested persons may submit comments on or before January 27, 
2017.

ADDRESSES: Submit comments to the Office of Information and Regulatory 
Affairs of the Office of Management and Budget, Attention: Desk Officer 
for the Federal Housing Finance Agency, Washington, DC 20503, Fax: 
(202) 395-3047, Email: [email protected]. Please also submit 
comments to FHFA, identified by ``Proposed Collection; Comment Request: 
`National Survey of Mortgage Originations, (No. 2016-N-16)' '' by any 
of the following methods:
     Agency Web site: www.fhfa.gov/open-for-comment-or-input.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. If you submit your 
comment to the Federal eRulemaking Portal, please also send it by email 
to FHFA at [email protected] to ensure timely receipt by the agency.
     Mail/Hand Delivery: Federal Housing Finance Agency, Eighth 
Floor, 400 Seventh Street SW., Washington, DC 20219, ATTENTION: 
Proposed Collection; Comment Request: ``National Survey of Mortgage 
Originations, (No. 2016-N-16).''
     U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Alfred M. 
Pollard, General Counsel, Attention: Comments/2016-N-16, Federal 
Housing Finance Agency, 400 Seventh Street SW., Eighth Floor, 
Washington, DC 20219.
    We will post all public comments we receive without change, 
including any personal information you provide, such as your name and 
address, email address, and telephone number, on the FHFA Web site at 
http://www.fhfa.gov. In addition, copies of all comments received will 
be available for examination by the public on business days between the 
hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, 
Eighth Floor, 400 Seventh Street SW., Washington, DC 20219. To make an 
appointment to inspect comments, please call the Office of General 
Counsel at (202) 649-3804.

FOR FURTHER INFORMATION CONTACT: Forrest Pafenberg, Supervisory 
Economist, Office of the Chief Operating Officer, by email at 
[email protected] or by telephone at (202) 649-3129; or Eric 
Raudenbush, Associate General Counsel, by email at 
[email protected] or by telephone at (202) 649-3084, (these are 
not toll-free numbers), Federal Housing Finance Agency, 400 Seventh 
Street SW., Washington, DC 20219. The Telecommunications Device for the 
Hearing Impaired is (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

A. Background

    The NSMO is a recurring quarterly survey of individuals who have 
recently obtained a loan secured by a first mortgage on single-family 
residential property. The survey questionnaire is sent to a 
representative sample of approximately 6,000 recent mortgage borrowers 
each calendar quarter and typically consists of between 90 and 95 
multiple choice and short answer questions designed to obtain 
information about borrowers' experiences in choosing and in taking out 
a mortgage.\1\ The questionnaire may be completed either on paper or 
electronically online, and is available in both English and Spanish. 
The NSMO is sponsored by FHFA and is one component of the National 
Mortgage Database Project, an ongoing joint effort of FHFA and the 
Consumer Financial Protection Bureau (CFPB).
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    \1\ A copy of the most recent NSMO questionnaire appears at the 
end of this document. In addition, copies of the questionnaire in 
both English and Spanish can be accessed online at: http://www.fhfa.gov/Homeownersbuyer/Pages/National-Survey-of-Mortgage-Originations.aspx.
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    Section 1324 of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (Safety and Soundness Act) requires that FHFA 
prepare annually a detailed report on the residential mortgage market 
activities of two of its regulated entities--the Federal National 
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage 
Corporation (Freddie Mac) (collectively, ``the Enterprises'')--and to 
submit that annual report to the Committee on Banking, Housing, and 
Urban Affairs of the Senate and the Committee on Financial Services of 
the House of Representatives.\2\ At a minimum, the report must: (1) 
Address the extent to which the Enterprises are fulfilling their 
statutory duties with respect to the residential mortgage markets, 
including their duty to serve underserved markets; (2) aggregate and 
analyze relevant data on income to assess the compliance of each 
Enterprise with statutory housing goals established under section 1331 
of the Safety and Soundness Act; \3\ (3) aggregate and analyze data on 
income, race, and gender by census tract and other relevant 
classifications, and compare such data with larger demographic, 
housing, and economic trends; (4) identify the extent to which each 
Enterprise is involved in mortgage purchases and secondary market 
activities involving subprime and nontraditional loans; (5) compare the 
characteristics of subprime and nontraditional loans purchased and 
securitized by each Enterprise to other loans purchased and securitized 
by each Enterprise; and (6) compare the characteristics of high-cost 
loans purchased and securitized, but not held in portfolio, by each 
Enterprise to such securitized loans that are retained in portfolio or 
repurchased by the Enterprise, including such characteristics as the 
purchase price of the property securing the mortgage, the loan-to-value 
ratio of the mortgage, the terms of the mortgage, the creditworthiness 
of the borrower, and any other relevant data, as determined by the 
Director of FHFA.\4\
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    \2\ See 12 U.S.C. 4544(a). Congress added the requirements of 
section 1324 to the Safety and Soundness Act in 2008. See Housing 
and Economic Recovery Act of 2008, Public Law 110-289, sec. 1125, 
122 Stat. 2654, 2693-95 (2008).
    \3\ 12 U.S.C. 4561.
    \4\ See 12 U.S.C. 4544(b).
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    Section 1324 further requires that FHFA conduct a monthly survey to 
collect data needed to adequately analyze the matters that must be 
addressed in the annual report.\5\ In particular, the survey must 
collect information on the characteristics of individual prime and 
subprime mortgages and the creditworthiness and other characteristics 
of the borrowers on those mortgages.\6\ It may also address such other 
matters as the Director of FHFA deems to be appropriate.\7\ The statute 
requires that FHFA compile a database of timely and otherwise 
unavailable residential mortgage market information obtained from the 
monthly survey and to make that information available to the public.\8\
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    \5\ See 12 U.S.C. 4544(c)(1).
    \6\ See 12 U.S.C. 4544(c)(2)(A), (B).
    \7\ See 12 U.S.C. 4544(c)(2)(C).
    \8\ See 12 U.S.C. 4544(c)(3).
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    As a means of fulfilling these and other statutory requirements, as 
well as to support policymaking and research regarding the residential 
mortgage markets, FHFA and CFPB jointly established the National 
Mortgage Database Project in 2012. The project is designed to provide 
comprehensive information about the U.S. mortgage market based on a 
five percent sample of residential mortgages. The project has three 
primary components: (1) The National Mortgage Database; (2) the 
quarterly NSMO; and (3) the annual

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American Survey of Mortgage Borrowers (ASMB).\9\ When fully complete, 
the National Mortgage Database will be a de-identified loan-level 
database of closed-end first-lien residential mortgage loans that is 
representative of the market as a whole, contains detailed loan-level 
information on the terms and performance of the mortgages and the 
characteristics of the associated borrowers and properties, is 
continually updated, has an historical component dating back to 1998, 
and provides a sampling frame for surveys to collect additional 
information.
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    \9\ While the NSMO solicits information about the experiences of 
borrowers who have recently obtained a mortgage, the ASMB solicits 
information on borrowers' experience with maintaining their existing 
mortgages. OMB has cleared the ASMB under the PRA and assigned it 
control no. 2590-0015, which expires on July 31, 2019.
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    The core data in the National Mortgage Database are drawn from a 
random 1-in-20 sample of all closed-end first-lien mortgage loans 
outstanding at any time between January 1998 and the present from the 
files of Experian, one of the three nationwide credit reporting 
agencies. The National Mortgage Database currently contains data on 
approximately 11.6 million mortgage loans. Between 80,000 and 100,000 
mortgages, drawn from a random 1-in-20 sample of loans newly reported 
to Experian, are added each quarter. Additional information on the 
mortgages in the datasets is drawn from other existing sources, 
including, but not limited to the Home Mortgage Disclosure Act (HMDA) 
data released by the Federal Financial Institutions Examination Council 
(FFIEC), property valuation models, transactional data maintained by 
local governments, and administrative data files maintained by the 
Enterprises and by federal agencies. Mortgages are followed in the 
National Mortgage Database until they terminate through prepayment 
(including refinancing), foreclosure, or maturity.
    The NSMO was developed to complement the National Mortgage Database 
by providing critical and timely information--not available from 
existing sources--on the range of nontraditional and subprime mortgage 
products being offered, the methods by which these mortgages are being 
marketed, and the characteristics of borrowers for these types of 
loans. In particular, the survey questionnaire is designed to elicit 
directly from mortgage borrowers information on the characteristics of 
borrowers and on their experiences in finding and obtaining a mortgage 
loan, including: Their mortgage shopping behavior; their mortgage 
closing experiences; their expectations regarding house price 
appreciation; and critical financial and other life events effecting 
their households, such as unemployment, large medical expenses, or 
divorce. The survey questions do not focus on the terms of the 
borrowers' mortgage loans because these fields are available in the 
Experian data. However, the NSMO collects a limited amount of 
information on each respondent's mortgage to verify that the Experian 
records and survey responses pertain to the same mortgage.
    Each wave of the NSMO is sent to the primary borrowers on about 
6,000 mortgage loans, which are drawn from a simple random sample of 
the 80,000 to 100,000 newly originated mortgage loans that are added to 
the National Mortgage Database from the Experian files each quarter (at 
present, this represents an approximately 1-in-15 sample of loans added 
to the National Mortgage Database and an approximately 1-in-300 sample 
of all mortgage loan originations). By contract with FHFA, the conduct 
of the NSMO is administered through Experian, which has subcontracted 
the survey administration through a competitive process to Westat, a 
nationally-recognized survey vendor.\10\ Westat also carries out the 
pre-testing of the survey materials. Wave 1 of the NSMO was mailed out 
in April 2014, and a new wave of the survey has been conducted each 
quarter since. To date, eleven quarterly waves of the survey have been 
completed.
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    \10\ The Fair Credit Reporting Act, 15 U.S.C. 1681 et seq., 
requires that the survey process, because it utilizes borrower names 
and addresses drawn from credit reporting agency records, must be 
administered through Experian in order to maintain consumer privacy.
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B. Need For and Use of the Information Collection

    FHFA views the National Mortgage Database Project as a whole, 
including the NSMO, as the monthly ``survey'' that is required by 
section 1324 of the Safety and Soundness Act. Core inputs to the 
National Mortgage Database, such as a regular refresh of the Experian 
data, occur monthly, though NSMO itself does not. In combination with 
the other information in the National Mortgage Database, the 
information obtained through the NSMO is used to prepare the report to 
Congress on the mortgage market activities of Fannie Mae and Freddie 
Mac that FHFA is required to submit under section 1324, as well as for 
research and analysis by FHFA and CFPB in support of their regulatory 
and supervisory responsibilities related to the residential mortgage 
markets. The NSMO is especially critical in ensuring that the National 
Mortgage Database contains uniquely comprehensive information on the 
range of nontraditional and subprime mortgage products being offered, 
the methods by which these mortgages are being marketed and the 
characteristics--and particularly the creditworthiness--of borrowers 
for these types of loans. In the future, the information may be used to 
provide a resource for research and analysis by other federal agencies 
and by academics and other interested parties outside of the 
government.
    FHFA is also seeking OMB approval to conduct cognitive pre-testing 
of the survey materials. The Agency will use information collected 
through that process to assist in drafting and modifying the survey 
questions and instructions, as well as the related communications, to 
read in the way that will be most readily understood by the survey 
respondents and that will be most likely to elicit usable responses. 
Such information will also be used help the Agency decide on how best 
to organize and format the survey questionnaires.
    The OMB control number for this information collection is 2590-
0012. The current clearance for the information collection expires on 
December 31, 2016.

C. Burden Estimate

    FHFA has analyzed the hour burden on members of the public 
associated with conducting the survey (12,000 hours) and with pre-
testing the survey materials (30 hours) and estimates the total annual 
hour burden imposed on the public by this information collection to be 
12,030 hours. The estimate for each phase of the collection was 
calculated as follows:

I. Conducting the Survey

    FHFA estimates that the NSMO questionnaire will be sent to 24,000 
recipients annually (6,000 recipients per quarterly survey x 4 calendar 
quarters). Although, based on historical experience, the Agency expects 
that only 30 to 35 percent of those surveys will be returned, it has 
assumed that all of the surveys will be returned for purposes of this 
burden calculation. Based on the reported experience of respondents to 
prior NSMO questionnaires, FHFA estimates that it will take each 
respondent 30 minutes (0.5 hours) to complete the survey, including the 
gathering of necessary materials to respond to the questions. This 
results in a total annual burden estimate of 12,000 hours for the 
survey phase of this collection (24,000

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respondents x 0.5 hours per respondent = 12,000 hours annually).

II. Pre-Testing the Materials

    FHFA estimates that it will pre-test the survey materials with 30 
cognitive testing participants annually. The estimated participation 
time for each participant is one hour, resulting in a total annual 
burden estimate of 30 hours for the pre-testing phase of the collection 
(30 participants x 1 hour per participant = 30 hours annually).

D. Comments Received in Response to Initial Notice

    In accordance with the requirements of 5 CFR 1320.8(d), FHFA 
published an initial notice requesting comments regarding this 
information collection in the Federal Register on September 13, 
2016.\11\ The 60 day comment period closed on November 14, 2016. FHFA 
received two comment letters, one of which recommended revisions to the 
content of the survey questionnaire and the other of which recommended 
measures to increase survey response rates. FHFA has carefully 
considered each of the suggested revisions, but, as explained below, 
has decided not to implement any of those suggestions at this time.
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    \11\ See 81 FR 62889 (Sept. 13, 2016).
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    The first comment letter was from an individual who has served in 
various capacities with a community association trade group and who is 
the president of a company that provides online technology in support 
of the sale, resale, finance, and refinance of homes in community 
associations.\12\ The letter asserts that certain questions in the NSMO 
questionnaire ``fail to adequately and effectively recognize'' the role 
of community associations in U.S. home ownership and that, as a result, 
data from the NSMO regarding community associations ``has nominal 
heuristic and statistical value at best.'' It suggests adding several 
questions to the NSMO questionnaire, and revising several existing 
questions, to elicit more information relevant to community 
associations.
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    \12\ The letter explains that community associations are 
``housing management organizations that are an out-growth of 
traditional subdivision and zoning controls'' and include 
condominiums, cooperatives, and planned communities.
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    Specifically, the letter first suggests revising Question 60 to 
elicit more specific information on the type of property that is 
associated with the respondent's mortgage and adding two questions as 
to whether the respondent's property is in a community association and, 
if so, the specific type of community association. FHFA believes that, 
while such questions could be suitable for a survey that focuses on 
housing structure, they would not be appropriate for the NSMO, which 
focuses on consumers' experience in seeking and obtaining a residential 
mortgage loan.\13\ The commenter also suggests adding a question to 
elicit information on the respondent's level of familiarity with 
various types of community association fees. Again, such a question 
would be beyond the scope of the NSMO, which does not attempt to 
capture information on the cost of a mortgage or on fees paid at 
origination or over the life of the mortgage.
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    \13\ Both the American Housing Survey (sponsored jointly by the 
Department of Housing and Urban Development and the Census Bureau) 
and the American Community Survey (sponsored by the Census Bureau) 
would be more appropriate vehicles for eliciting such information.
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    Finally the letter suggests revising the answer choices for 
Questions 7, 39, and 50 to allow respondents to indicate, respectively: 
Whether they used any of the proceeds from a refinance to pay community 
association fees; whether and to what extent community association 
documents or officials may have provided them with information about 
mortgages or mortgage lenders; and whether and to what extent they 
sought input about their mortgage loan closing documents from officials 
of a community association. FHFA notes that each of those questions 
permits a respondent to choose ``other'' and to write in a specific 
answer if none of the other answer choices are applicable. To date, 
none of the questions have elicited an ``other'' response in the vein 
of any of the answer choices that the commenter suggests adding. 
Accordingly, FHFA does not see a need to revise any of the questions in 
the manner suggested.
    The second comment letter, from a law school professor, states that 
the NSMO is very important to understanding the health of the mortgage 
market and agrees that the collection is necessary for the proper 
performance of FHFA functions. However, it also expresses a concern 
that, given the length of the survey questionnaire, those recipients 
who ultimately decide to respond will not be representative of the 
typical borrower. It suggests two ways of encouraging a response from 
recipients who might otherwise be reluctant to take the time to 
complete the survey: (1) Providing a greater incentive; and (2) 
allowing recipients the option of completing a shorter version of the 
questionnaire.
    FHFA agrees that non-response bias (the bias that results when 
respondents differ systematically from non-respondents) is an important 
concern and the Agency has spent, and continues to spend, significant 
time considering ways to increase response rates and to mitigate the 
effects of non-response bias. In developing the NSMO, the Agency 
consulted with top experts on conducting consumer surveys, who 
recommended an up-front payment of five dollars as the most effective 
way of incentivizing survey recipients to respond. FHFA adopted this 
recommendation. In addition, based on the results of the first seven 
waves of the NSMO, these experts also evaluated the expected effect on 
the response rate of increasing or decreasing the number of questions 
and the length of the questionnaire. Both experts opined that 
shortening the questionnaire would not significantly increase the 
response rate.
    With respect to the mitigation of non-response bias when analyzing 
survey responses, FHFA has followed best practices of survey sampling 
analysis. The availability in the National Mortgage Database of 
extensive credit and administrative data on both responding and non-
responding borrowers gives FHFA the ability to construct non-response 
weights with more accuracy than is possible for most surveys.

E. Comment Request

    In accordance with the requirements of 5 CFR 1320.10(a), FHFA is 
publishing this second notice to request comments regarding the 
following: (1) Whether the collection of information is necessary for 
the proper performance of FHFA functions, including whether the 
information has practical utility; (2) the accuracy of FHFA's estimates 
of the burdens of the collection of information; (3) ways to enhance 
the quality, utility and clarity of the information collected; and (4) 
ways to minimize the burden of the collection of information on members 
and project sponsors, including through the use of automated collection 
techniques or other forms of information technology. Comments should be 
submitted in writing to both OMB and FHFA as instructed above in the 
Comments section.

    Dated: December 22, 2016.
Kevin Winkler,
Chief Information Officer, Federal Housing Finance Agency.

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[FR Doc. 2016-31386 Filed 12-27-16; 8:45 am]
 BILLING CODE 8070-01-P