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Thursday,

November 10, 2005

Part IV

Department of
Housing and Urban
Development
24 CFR Part 81
Release in the Public Use Database of
Certain Mortgage Data and Annual
Housing Activities Report (AHAR)
Information of the Federal National
Mortgage Association (Fannie Mae) and
the Federal Home Loan Mortgage
Corporation (Freddie Mac); Final Rule

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DEPARTMENT OF HOUSING AND regulations at 24 CFR 81.75 to Section 1323 of FHEFSSA requires
URBAN DEVELOPMENT incorporate the procedures the Secretary HUD to make available to the public
will use to make determinations under data submitted to HUD by the GSEs
24 CFR Part 81 each of the above categories and makes relating to the GSEs’ mortgage
[Docket No. FR–4947–F–02] certain technical and editorial changes purchases. HUD makes much of this
to 24 CFR 81.74 and 81.75. data available to the public via its GSE
RIN 2501–AD09 This final rule follows publication of public use database, compendia, and
a January 10, 2005, proposed rule and other means. However, the law prohibits
Release in the Public Use Database of takes into consideration the public the Secretary from disclosing mortgage
Certain Mortgage Data and Annual comments received in response to the data that he or she determines to be
Housing Activities Report (AHAR) proposed rule. proprietary.2 Specifically, section 1326
Information of the Federal National of FHEFSSA states that the Secretary
DATES: Effective Date: December 12,
Mortgage Association (Fannie Mae) may, by regulation or order, ‘‘provide
2005.
and the Federal Home Loan Mortgage that certain information shall be treated
Corporation (Freddie Mac) FOR FURTHER INFORMATION CONTACT: as proprietary information and not
Sandra Fostek, Director, Office of subject to disclosure under section 1323
AGENCY: Office of the Assistant Government Sponsored Enterprises,
Secretary for Housing—Federal Housing of [title 12 of the United States Code],
Office of Housing, Room 3150, section 309(n)(3) of the [Fannie Mae
Commissioner, HUD. telephone (202) 708–2224. For questions Charter Act], or section 307(f)(3) of the
ACTION: Final rule. on data, contact John L. Gardner, [Freddie Mac Act].’’ 3
Director, Financial Institutions This prohibition on the disclosure of
SUMMARY: This final rule amends HUD’s Regulation Division, Office of Policy proprietary information is repeated in
regulations to permit the release to the Development and Research, Room 8212, section 1323(b)(1) of FHEFSSA, which
public of certain data and information telephone (202) 708–1464. For legal states, in part, that ‘‘* * * the Secretary
that have been, and will be, submitted questions, contact Paul S. Ceja, may not make available to the public
to HUD by the Federal National Assistant General Counsel for data that the Secretary determines
Mortgage Association (Fannie Mae) and Government Sponsored Enterprises/ pursuant to section 1326 are proprietary
the Federal Home Loan Mortgage RESPA, or Sharmeen Dosky, Senior information.’’ Thus, the Secretary is
Corporation (Freddie Mac) (collectively, GSE/RESPA Division Attorney, Office of authorized by section 1326 of FHEFSSA
the government sponsored enterprises, the General Counsel, Room 9262, to make determinations, by regulation or
or GSEs). These amendments allow for telephone (202) 708–3137. The address order, that certain GSE mortgage data
the release of GSE mortgage data that for all of these persons is the are proprietary, except as expressly
fall into three categories, as identified in Department of Housing and Urban prohibited by section 1323(b)(2) of
HUD’s proposed rule. The first category Development, 451 Seventh Street, SW., FHEFSSA.4
involves HUD’s public release of GSE Washington, DC, 20410–0500. Persons Under HUD’s regulations at 24 CFR
mortgage data that the Secretary, by with hearing and speech impairments 81.75, the Secretary issues a temporary
regulation or order, reclassifies from may access the phone numbers via TTY order, final order, or regulation to
proprietary to non-proprietary status. by calling the Federal Information Relay withhold mortgage data or AHAR
Following the Secretary’s determination Service at (800) 877–8399. information from the public use
to reclassify such data as non- database and from public disclosure and
SUPPLEMENTARY INFORMATION:
proprietary, HUD will release the GSE
mortgage data to the public both I. Background from the GSEs under subsection 309(m) of the
prospectively and for all preceding The Federal Housing Enterprises Fannie Mae Charter Act and subsection 307(e) of
years’ public use databases. The second Financial Safety and Soundness Act of the Freddie Mac Charter Act.’’
2 HUD’s regulations at 24 CFR 81.2 define the
category involves HUD’s public release 1992 (FHEFSSA), Pub. L. 102–550, term ‘‘proprietary information’’ to mean ‘‘all
of certain GSE aggregated data derived approved October 28, 1992, requires mortgage data and all AHAR information that the
from proprietary loan-level mortgage HUD to establish and monitor the GSEs submit to the Secretary in the AHARs that
data that the Secretary determines are performance of Fannie Mae and Freddie contain trade secrets or privileged or confidential,
not proprietary when presented in commercial, or financial information that, if
Mac in meeting annual goals for released, would be likely to cause substantial
aggregated form. Following the purchases of mortgages on housing for competitive harm.’’
Secretary’s determination that such low- and moderate-income families, 3 In addition to FHEFSSA’s prohibition on the
aggregations of GSE data are not housing located in central cities, rural disclosure of GSE proprietary information, HUD’s
proprietary, HUD will release the data to areas, and other underserved areas, and regulations at 24 CFR 81.72(c)(1) prohibit the
the public both prospectively and for all release of certain types of mortgage data and AHAR
special affordable housing (i.e., housing information, including mortgage data and AHAR
preceding years. The third category meeting the needs of and affordable to information that would ‘‘constitute a clearly
involves the release of certain GSE low-income families in low-income unwarranted invasion of personal privacy if such
mortgage data that are at least five years areas and very low-income families). data or information were released to the public’’
old that the Secretary determines, by (citing 24 CFR 81.72(b)(3)) or that are ‘‘required to
Fannie Mae submits mortgage data be withheld or * * * [that are] not appropriate for
regulation or order, to re-classify from and AHAR information to HUD under public disclosure under other applicable laws and
proprietary to non-proprietary status sections 309(m) and (n), respectively, of regulations, including the Trade Secrets Act * * *
because of the passage of time. This the Fannie Mae Charter Act (12 U.S.C. and Executive Order 12600’’ (citing 24 CFR
final rule provides that such data may, 81.72(b)(4)).
1723a(m) and (n)). Freddie Mac makes 4 The exception set forth in paragraph (2) of
as determined by the Secretary on a these submissions to HUD under section 1323(b) of FHEFSSA states that the
case-by-case basis, lose proprietary sections 307(e) and (f), respectively, of Secretary may not restrict access to GSE single-
status once the data have aged a the Freddie Mac Act (12 U.S.C. 1456(e) family mortgage data submitted to the Secretary
minimum of five years, with the time under section 309(m)(1)(A) of the Fannie Mae
and (f)).1 Charter Act or section 307(e)(1)(A) of the Freddie
interval for particular data elements to Mac Act relating to ‘‘the income, census tract
be determined by the Secretary. The 1 HUD defines the term ‘‘mortgage data’’ at 24 location, race, and gender of mortgagors under such
final rule also amends HUD’s CFR 81.2 to mean ‘‘data obtained by the Secretary mortgages.’’

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may, by regulation or order, issue a list list of proprietary determinations by NAHB expressed support for the 2005
providing that certain mortgage data and reclassifying certain GSE mortgage data Proposed Rule, stating that the rule
AHAR information shall be treated as as non-proprietary, the Secretary would appropriately balanced the need to
proprietary information. HUD first release to the public the reclassified, protect the privacy of borrowers,
issued such a list by order in 1995,5 non-proprietary mortgage data both lenders, and the proprietary needs of the
modified it by order in 1996 6 and again prospectively and for all years GSEs, with Congress’ intent to increase
in 2004.7 In these orders, the list took preceding the effective date of HUD’s the transparency and public
the form of tables that indicated the determination, unless otherwise accountability of the GSEs by providing
organization and contents of the public provided by the Secretary. This GSE the public with as much data as possible
use databases that were subsequently mortgage data would be released to the regarding the GSEs’ mortgage purchases.
issued by HUD covering the GSEs’ public via HUD’s GSE public use NAHB maintained that the 2005
annual purchases since 1993. database. (See 24 CFR 81.75(b)(2).) Proposed Rule contained valid
As noted, on October 4, 2004, HUD • Prospective and prior years’ release safeguards and measures to protect the
published in the Federal Register a of non-proprietary aggregations of data. privacy of consumers and the GSEs’
notice of final order reclassifying as Following a Secretarial determination business platforms.
non-proprietary certain loan-level ACB expressed support for increased
that certain aggregated data derived
mortgage data elements contained in the transparency and disclosure of GSE data
from proprietary loan-level mortgage
GSEs’ annual loan-level data files that to help the public measure the GSEs’
data are not proprietary when presented
will be submitted by the GSEs to HUD performance against their mission
in aggregated form, HUD proposed to
pursuant to their charter acts (the 2004 responsibilities and against the private
release to the public the non-proprietary
Final Order). The Department’s market. However, ACB also indicated
aggregations of data both prospectively that HUD’s proposed reclassification
determinations with respect to the and for all years preceding the effective
proprietary status of the mortgage data and release of additional data might
date of the Secretary’s determination, subject the GSEs and, as a result, the
elements were discussed in the 2004 unless otherwise provided by the
Final Order. The resulting revised GSEs’ sellers/servicers, to financial and
Secretary. These aggregations of data competitive harm.
structure of the public use database was would be released to the public in the
summarized in the revised tables The GSEs objected to several aspects
form of a compendium, or by other of the 2005 Proposed Rule claiming that
attached to the 2004 Final Order as an means. (See 24 CFR 81.75(c).)
appendix. The 2004 Final Order the rule, if implemented, could result in
• Release of non-proprietary aged an infringement on the GSEs’ property
indicated that the Department would,
data. Following a Secretarial rights in their proprietary data with
beginning in 2005, release the
determination to reclassify as non- resulting significant competitive harm.
reclassified data elements through the
proprietary certain GSE mortgage data The GSEs also expressed concerns that
Department’s public use database
included on the list of proprietary the rule would result in the release of
covering the GSEs’ 2004 mortgage
determinations that are at least five data that could violate consumers’
purchases and in all future public use
years old, HUD proposed to release to privacy.
databases.8
the public the reclassified aged data. Following is a more in-depth
On January 10, 2005, HUD published
Specifically, HUD proposed that data discussion of the public comments, and
in the Federal Register a proposed rule
classified as proprietary that have aged HUD’s determinations in response to the
(70 FR 1774) in which it proposed to
a minimum of five years could be comments.
release to the public certain mortgage
subject to reclassification as non- B. Discussion of Public Comments
data and aggregated data that have been,
proprietary data for release to the public
and will be, submitted to HUD by Comment: Proposed regulatory
because of the passage of time. HUD
Fannie Mae and Freddie Mac (the 2005 procedures fail to provide GSEs with
noted that the time interval for
Proposed Rule). Following are the due process. Both GSEs asserted that
particular data elements would be
categories of data that HUD proposed to HUD’s proposed procedures for
determined by the Secretary on a case-
release to the public. The reader should reclassifying data are inadequate and
by-case basis. (See 24 CFR 81.75(b)(3).)
note that these are the same categories fail to provide the GSEs with due
HUD sought public comment, in
that HUD described in the 2005 process so that they can protect
particular, on whether five years
Proposed Rule. However, for the sake of important property rights in their
represented a reasonable minimum
clarity, HUD is now describing each of proprietary data. They maintained that
period after which mortgage data might
these three categories separately, rather the proposed adoption of the procedures
lose their proprietary character and, as
than combining into one category the in 24 CFR 81.74(f)(1) and (2) for
a result, warrant a reconsideration of
prospective and prior years’ release of reclassifications of mortgage data are
proprietary status under HUD’s
reclassified mortgage data and inappropriate when HUD, rather than a
regulations. Public comment also was
aggregated data. GSE, is initiating the proprietary
solicited on whether a longer or shorter
• Prospective and prior years’ release determination process.
period should be adopted in the final
of reclassified data. Following a Fannie Mae also disputed HUD’s
rule, and the point at which the period
Secretarial determination to modify the assertion in the 2005 Proposed Rule that
should begin to run.
the proposed adoption of the procedures
5 See Appendix F to HUD’s 1995 final housing
II. Discussion of Public Comments in § 81.74(f) for use in connection with
goals rule, which set forth an order identifying the
list of data elements that HUD had determined A. Overview of Comments reclassifications of data under § 81.75
under section 1326 of FHEFSSA to be proprietary ‘‘represents a codification of existing
and those data elements that it had determined to HUD received four public comments practice * * *.’’ Fannie Mae contended
be non-proprietary, at 60 FR 62001–5. in connection with the 2005 Proposed that, in the past, whenever HUD has
6 See HUD’s final order published on October 17,

1996 (61 FR 54322).


Rule. Comments were received from the initiated a reclassification of data, it has
7 See HUD’s final order published on October 4, National Association of Home Builders provided the GSEs with significantly
2004 (69 FR 59476). (NAHB), America’s Community Bankers more opportunities to analyze, consider,
8 Id. at 69 FR 59482. (ACB), Fannie Mae, and Freddie Mac. and respond in writing to HUD’s

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proposals than that afforded by Specifically, HUD has adopted in may be necessary when a GSE initiates
§ 81.74(f). § 81.75(d)(1) Fannie Mae’s the request for proprietary
Fannie Mae urged HUD to include in recommendation to notify the GSEs in determination so that the Secretary can
the final rule a number of procedural writing of the actual data element(s), gain ‘‘additional information concerning
protections, including the following: (1) AHAR information, and/or aggregated the request,’’ HUD believes that it may
HUD would be required, prior to making data that are under consideration for not always be necessary where the
a determination, to notify the GSEs in release to the public. Secretary has initiated a proposed
writing of the actual data elements and/ HUD has not, however, adopted release of mortgage data, AHAR
or aggregated data that are under Fannie Mae’s suggestion that the written information, or aggregated data.
consideration for release to the public; notice include the basis for HUD’s Accordingly, § 81.75(d)(1) provides
(2) HUD’s written notice would contain proposed reclassification of the data that the ‘‘Secretary may also provide
the basis for the reclassification of the elements since any reclassification that each GSE with an opportunity for a
data elements and an assessment of the HUD undertakes must be based upon meeting with HUD to discuss the
factors contained in § 81.74(b); (3) HUD the Secretary’s consideration of all of proposed release of mortgage data,
would provide the GSEs with a the regulatory factors in § 81.74(b). AHAR information or aggregated data.’’
minimum of 30 days in which to submit In addition, HUD has not adopted (Emphasis added.) HUD believes that
written comments; (4) after reviewing Fannie Mae’s suggestion that the written this discretionary authority to hold a
the GSEs’ written comments, HUD notice include HUD’s assessment of the meeting strikes a necessary and careful
would provide each GSE with an data proposed to be reclassified under balance between HUD’s obligation to
opportunity to meet to discuss the effect each of the regulatory factors in provide the GSEs with an opportunity to
of the proposed public release; (5) after § 81.74(b). HUD does not prepare this object to any proposed release of their
the meeting, HUD may request assessment until it has completed any mortgage data, AHAR information, or
additional information or make a fact-finding that it considers to be aggregated data (in this final rule, by the
determination; and (6) if HUD decides necessary in connection with a submission of written comments), while
to make the data elements or aggregated proposed reclassification of mortgage also streamlining the administrative
data non-proprietary, it will provide data. (For example, HUD would want to process sufficiently that non-proprietary
notice to the GSEs of its determination have the benefit of the GSEs’ mortgage data, AHAR information, or
and state that the Secretary will not perspectives and input with respect to aggregated data can be made available to
release the data for 10 working days. any proposed release of its mortgage the public in an efficient manner. To the
HUD Determination. HUD has data or AHAR information before HUD extent that the Secretary determines that
considered the GSEs’ comments and is develops its assessment of the relevant it would be helpful, before making a
persuaded by some of these comments mortgage data elements or AHAR determination, to meet with the GSEs
and, as a result, has made several information under the regulatory factors individually to discuss the proposed
changes to § 81.75 at this final rule in § 81.74(b).) release of mortgage data, AHAR
stage. However, HUD is not persuaded HUD also has determined not to adopt information, or aggregated data, he or
by other GSE comments and, as a result, Fannie Mae’s recommendation that the she will arrange to do so.
has not incorporated these suggested rule provide the GSEs with a minimum Section 81.75(d)(2) of this final rule
changes in this final rule. A discussion of 30 days in which to submit written provides that the Secretary shall make a
of each of HUD’s determinations comments. HUD believes that a 30-day determination regarding the proposed
follows. minimum period may not be an release of the GSEs’ mortgage data,
In response to the GSEs’ expressed appropriate period of time, in every AHAR information, or aggregated data
concerns that the procedures in existing instance, for the submission of written based on a consideration of the data or
§ 81.74(f)(1) and (2) are inappropriate comments in connection with a information under the standards set
when HUD, rather than a GSE, initiates proposed reclassification of mortgage forth in § 81.74(b) and the GSEs’ written
the proprietary determination process, data or AHAR information. As a result, and oral objections, if any, to the
HUD has determined that it would be HUD believes that it is appropriate for proposed release of the mortgage data,
simpler and more straightforward to it to retain the discretion to determine, AHAR information, or aggregated data.
incorporate the applicable procedures on a case-by-case basis, what constitutes This language is consistent with the
into § 81.75. These are the procedures a reasonable period of time by which current requirements in §§ 81.74(b) and
the Secretary will use whenever he or the GSEs must submit their written 81.74(f)(2), except that HUD has now
she proposes to issue an order comments. added a requirement that the Secretary
authorizing the release of reclassified HUD’s current regulations at 24 CFR must consider, in making his or her
mortgage data or AHAR information, or 81.74(f)(1) state that the Secretary, in determination, the GSEs’ written
aggregations of data derived from considering a GSE’s proprietary request, comments objecting to the proposed
proprietary loan-level mortgage data. As ‘‘shall provide the GSE with an release of the mortgage data, AHAR
a result of this change, HUD has opportunity for a meeting with HUD to information, or aggregated data. If the
eliminated its proposed cross-references discuss the matter for the purpose of Secretary, or his or her designee, has
in § 81.75(b)(1) and (c) to the regulatory gaining additional information also met with the GSEs about the
procedures in § 81.74(f)(1) and (f)(2), concerning the request.’’ Because HUD proposed release of mortgage data,
and has instead established the is providing the GSEs in § 81.75(d)(1) AHAR information, or aggregated data,
applicable procedures in a new with the opportunity to submit written the Secretary also is required by
§ 81.75(d). comments in connection with any § 81.75(d)(2) to consider the GSEs’ oral
A review of § 81.75(d) reveals that it proposed release of GSE mortgage data, objections, if any.
largely incorporates the procedures that AHAR information or aggregated data, New § 81.75(d)(3) states that the
currently exist in § 81.74(f)(1) and (f)(2). HUD does not believe that it is Secretary shall provide notice in writing
However, HUD has made changes to necessary to require, in each instance, to each GSE of the Secretary’s
some of those procedures as a result of that HUD also offer to hold a meeting determination and the reasons under
its consideration of the GSEs’ comments with the GSEs before making its § 81.74(b) for his or her determination.
on the proposed rule. determination. While such a meeting In addition, consistent with HUD’s

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existing regulations at § 81.74(f)(2)(ii) though HUD’s regulations require the ‘‘[t]he extent to which the mortgage data
and Fannie Mae’s own request, new Secretary to protect the confidentiality or AHAR information is publicly
§ 81.75(d)(3) states that whenever the of information the release of which available including whether the data or
Secretary determines that GSE mortgage would ‘‘constitute a clearly unwarranted information is available from other
data, AHAR information, or aggregated invasion of personal privacy,’’ they do entities, from local government offices
data may be released, the written notice not provide guidance on how HUD or records, including deeds, recorded
must also provide that the Secretary will would represent the interests of third mortgages, and similar documents, or
not release the mortgage data, AHAR parties whose privacy might be affected from publicly available databases.’’)
information, or aggregated data to the by the determination. (See 24 CFR HUD believes that these existing
public for 10 working days. 81.72(b)(3).) In particular, Fannie Mae standards are sufficient to permit the
New § 81.75(d)(4) states that the expressed concern that the Secretary’s Secretary to guide its proprietary
Secretary shall, no earlier than the end release of historical data for the years determinations and ensure that the
of the 10 working day period, publish 1993–2003 in connection with the privacy rights of third parties are not
an order in the Federal Register mortgage data elements that were violated.
notifying the public of the Secretary’s reclassified as non-proprietary in the For this same reason, HUD does not
determination to release the reclassified 2004 Final Order (‘‘1993–2003 agree that the procedures described in
mortgage data or AHAR information Historical Data’’) could allow the the 2005 Proposed Rule are ‘‘defective’’
and/or to release certain non-proprietary creation of borrower profiles with because they do not require HUD to
aggregations of data derived from personally identifiable information that provide notice to, and consider written
proprietary loan-level mortgage data. could be used irresponsibly by comments from, ‘‘all affected parties’’
The order will also modify the list of predatory lenders. before the Secretary makes a
proprietary determinations to reflect the Fannie Mae and Freddie Mac both reclassification determination.
Secretary’s reclassification of the asserted that the procedures in the 2005 HUD also does not believe it is
mortgage data or AHAR information. Proposed Rule were defective because necessary or appropriate to restrict the
This procedure is consistent with they do not require HUD to provide circumstances under which HUD may
existing § 81.75, which states that the notice to, and consider written undertake a reclassification
Secretary ‘‘may modify the list [of HUD comments from, ‘‘all affected parties’’ determination by order rather than
proprietary determinations] by before the Secretary makes a regulation. HUD is authorized by
regulation or order.’’ Section 81.75(d)(4) reclassification determination. section 1326 of FHEFSSA to make
also states that the Secretary shall omit Freddie Mac asked HUD to consider proprietary determinations ‘‘by
from the published order any whether the process for reclassifying regulation or order,’’ and HUD’s existing
information that would reveal information should generally be done by regulations at 24 CFR 81.75 also
proprietary information. This language a rulemaking or, in the alternative, to authorize the Secretary to modify a prior
is consistent with existing identify the circumstances under which proprietary determination by regulation
§ 81.74(e)(1)(ii), which requires that the a rulemaking may be more appropriate or order. In light of HUD’s statutory
Secretary exclude from public for reclassifying information than obligation under FHEFSSA to ensure
disclosure any portion of an order or through an order. ACB expressed that the GSEs’ non-proprietary mortgage
regulation that would reveal proprietary similar views, urging HUD to proceed data and AHAR information are made
information. by public rulemaking whenever a available to the public, and the
HUD believes that the changes pending determination could impact the regulatory standards that already exist
described above will go far in clarifying availability of loan-level information to protect the interests of third parties,
the procedures the Secretary will use in about specific lenders’ business, either HUD does not believe that the public
considering reclassifications of GSE directly or through cross-reference to interest would be served by curtailing
mortgage data and AHAR information any available third-party data. ACB, its authority to undertake a
and the release of certain aggregated Fannie Mae, and Freddie Mac each reclassification determination by order.
data derived from proprietary loan-level asked HUD to give all affected parties Comment: Rule should be amended to
mortgage data. While these procedures the right to comment on whether a include additional regulatory factors.
largely incorporate existing rulemaking would be more appropriate Fannie Mae urged HUD to amend its
requirements established by HUD in in light of the public interest in the regulations to include a consideration of
§ 81.74(f)(1) and (2), they also reflect proposed disclosures. the following two factors in connection
changes that HUD believes to be HUD Determination. HUD has with proprietary determinations: (1) The
appropriate in light of its dual statutory considered the public comments and extent to which data released by HUD
obligations to ensure that proprietary determined that no additional can be used singularly, or in
mortgage data or AHAR information are protections are required in this final conjunction with other information in
not released to the public, while also rule to protect the privacy rights of third the public domain, to ascertain
providing the public with the GSEs’ parties. As Fannie Mae has correctly confidential, private, or personal
non-proprietary mortgage data or AHAR noted, HUD’s existing regulations information about consumers, the GSEs’
information. As discussed above, these already require the Secretary to ensure business partners, real estate assets,
changes were made by HUD either in that data or information submitted by, and/or residents of properties financed
response to the GSEs’ comments, or as or relating to, the GSEs that would by mortgages purchased by the GSEs;
an outgrowth of HUD’s consideration of constitute a ‘‘clearly unwarranted and (2) the extent to which data may
the GSEs’ comments. invasion of personal privacy’’ are not assist in the planning and perpetration
Comment: Rule fails to provide third disclosed to the public. (See 24 CFR of terrorist acts, fraud, and/or other
parties with due process. Fannie Mae 81.71(e) and 81.72(b)(3).) HUD already malicious acts against real estate
noted that HUD, in promulgating this has regulatory standards in place at 24 properties, individuals, business
rule, must balance the public’s desire CFR 81.74(b) that enable the Secretary entities, or communities.
for data against important objectives of to protect the privacy rights of third With regard to its second proposed
protecting property rights and consumer parties. (See, for example,§ 81.74(b)(4), factor, Fannie Mae cited a Department
privacy. Fannie Mae asserted that even which requires the Secretary to consider of Homeland Security warning about

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terrorist groups that might target competitors after several years than at 5 U.S.C. 552(b)(3), the ‘‘time release’’ or
‘‘apartment buildings, hotels and other the time of origination. Fannie Mae ‘‘default presumption’’ under which
soft or lightly secured targets in the expressed particular concern about the information can become public after a
United States.’’ 9 Fannie Mae contended five-year time period in connection with submitter has requested confidentiality
that incorporating these factors into its multifamily business where loans is 10 years.
HUD’s regulations will help to ensure typically have maturities ranging from However, NAHB commented that the
that any changes to proprietary nine to ten years. ‘‘five year aging requirement’’ in
treatment of loan-level or aggregated Freddie Mac affirmed that five years proposed § 81.75(b)(3) establishes a
data involve a consideration of the is a short period of time when satisfactory method of respecting the
interests of all parties, as well as other considering long-term obligations like privacy expectations associated with
security interests that were not mortgages, and asserted that the release relevant mortgage data elements, and
significant concerns at the time the of five-year-old proprietary data still noted specifically that five years is ‘‘a
original public use database regulations presents privacy concerns to consumers significant amount of time.’’
were developed. and potentially could still cause harm to HUD Determination. HUD has
HUD Determination. After Freddie Mac and its customers. decided to retain the minimum five-year
considering Fannie Mae’s In particular, Freddie Mac disputed aging period for reclassifications of
recommendation, HUD has decided not HUD’s assertion in the 2005 Proposed mortgage data because of the passage of
to amend its regulations to add these Rule that significant portions of the GSE time, but has decided to make three
two additional regulatory factors. With mortgage data that it had previously clarifying changes to its regulations in
regard to Fannie Mae’s first determined to be proprietary are now response to the public comments it
recommendation, HUD believes that its ‘‘available publicly through private received.
existing regulations at § 81.74(b) already vendors.’’ Freddie Mac maintained that HUD believes that the five-year period
require the Secretary to consider the its data are different from other data that is a reasonable minimum period of time
extent to which mortgage data or AHAR can be purchased from a data broker after which mortgage data might lose
information are publicly available, over the Internet because ‘‘borrowers their proprietary character and, as a
including whether the data or provided this information to a mortgage result, warrant a reconsideration of
information are available from other lender under penalty of federal law’’ proprietary status under HUD’s
entities, from local government offices and, as a result, may be subject to civil regulations. However, as stated in the
or records, or from publicly available liability or criminal penalties for 2005 Proposed Rule, the five-year
databases (e.g., through the Home intentional or negligent period is a minimum aging requirement
Mortgage Disclosure Act (HMDA) misrepresentation of application that applies to reclassifications based on
database or other public and/or private information. the age of the mortgage data. The
vendors). (See § 81.74(b)(4).) Freddie Mac also asserted that the Secretary will determine the actual time
HUD considers Fannie Mae’s second Federal government’s decision to enact intervals for reconsideration of the
recommendation to be unnecessary the Gramm-Leach-Bliley Act (15 U.S.C. proprietary status of particular mortgage
since anyone seeking information on 6801, et seq., enacted November 12, data elements on a case-by-case basis.10
properties from the HUD public use 1999) to regulate the use and disclosure (See HUD’s discussion of this issue at 70
database would not be able to obtain of information provided to financial FR 1775 of the 2005 Proposed Rule.)
information at the same level of detail institutions, while choosing not to This case-by-case assessment of
that is already available in the public regulate other types of entities that may particular mortgage data elements
domain. For example, property street collect some of the same information, contradicts the GSEs’ contentions that
addresses are not available in the HUD recognizes that financial institution the five-year minimum period
public use database. information is ‘‘significantly more establishes a ‘‘presumption’’ that data
In light of the Secretary’s clear sensitive’’ than information available lose their proprietary character after
statutory duty under FHEFSSA to through other public sources. only five years. Nevertheless, HUD has
release to the public GSE mortgage data Both GSEs asserted that HUD’s 2005 decided to clarify this point by revising
and AHAR information that are not Proposed Rule establishes a the first sentence of § 81.75(b)(3) to
proprietary, and the comprehensive ‘‘presumption’’ that data lose their state, ‘‘[t]he Secretary may determine,
nature of the Secretary’s current proprietary character after only five through case-by-case consideration of
assessment under HUD’s regulations at years, and each vigorously disputed the individual data elements under
§ 81.74(b), HUD does not believe that validity of such a presumption. Freddie paragraph (b)(1) of this section, that
the addition of these two new regulatory Mac urged HUD to abolish such a certain mortgage data previously
factors is necessary or warranted. ‘‘presumption’’ and to review all six of determined to be proprietary may lose
Comment. Five-year aging period. the regulatory factors in 24 CFR 81.74(b) their proprietary status if they are at
Fannie Mae and Freddie Mac both before deciding whether to proceed with least five years old * * *’’ (Emphasis
objected strongly to the proposed five- a reclassification of proprietary added.)
year time period after which mortgage information. With regard to Freddie Mac’s
data might lose their proprietary Freddie Mac also asserted that other assertion that HUD should abolish the
character and, as a result, warrant a proprietary data collected by the five-year ‘‘presumption’’ and review all
reconsideration of proprietary status government have no ‘‘time-release
under HUD’s regulations. Fannie Mae provisions’’ or have much lengthier 10 As discussed in Section I of this preamble, any

maintained that aged data continue to ‘‘time release provisions.’’ Freddie Mac such HUD reconsideration would be subject to the
provide it with value, and that certain limitations of 24 CFR 81.72(c)(1), which prohibits
stated that HMDA has no ‘‘time-release the Secretary from publicly disclosing certain types
aged data are more valuable to provision’’ or ‘‘presumption,’’ and that of mortgage data and AHAR information, including
the U.S. Census of Population and mortgage data and AHAR information, the release
9 Citing remarks by former Secretary Tom Ridge,
Housing does not publicly release of which would constitute a clearly unwarranted
former Attorney General John Ashcroft, and invasion of personal privacy, that are required to be
Director Robert Mueller, U.S. Department of
individual-level data for 72 years. In withheld, or that the Secretary determines are not
Homeland Security, Office of the Press Secretary, addition, Freddie Mac noted that, under appropriate for public disclosure under other
February 7, 2003. the Freedom of Information Act (FOIA), applicable laws and regulations.

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six of the regulatory factors in 24 CFR information provided by mortgage of GSE mortgage data under HUD’s
81.74(b) before deciding whether to sellers to the GSEs. regulations implementing Exemption 4
proceed with a reclassification of With regard to Freddie Mac’s of FOIA at 24 CFR 15.108(b)(1), see the
proprietary information, HUD reiterates comment that other proprietary data 2005 Proposed Rule at 70 FR 1777.)
that this is precisely what HUD intends collected by the government have no Comment. Release of historical data
to do. HUD attempted to make this point ‘‘time-release provisions,’’ or have much constitutes retroactive rulemaking.
when it stated in the 2005 Proposed lengthier ‘‘time release provisions,’’ Fannie Mae claimed that the proposed
Rule that the ‘‘Secretary would make his HUD is uncertain as to the meaning that rule constitutes a ‘‘retroactive
or her determination [regarding the re- Freddie Mac is imputing to the term rulemaking’’ with respect to each of the
classification of aged data] based upon ‘‘time-release provision.’’ If Freddie Mac three circumstances in which it would
a consideration of the regulatory factors means that GSE mortgage data allow for the public release of the GSEs’
in § 81.74(b).’’ (Emphasis added.) (See previously determined by HUD to be historical data that has previously been
70 FR 1777.) In this final rule, HUD has proprietary will be reclassified as non- determined by HUD to be proprietary.
made two changes to further clarify this proprietary automatically after five Fannie Mae described these three
point. years under § 81.75(b)(3), then this categories as: (1) The release of GSE data
First, HUD has included a sentence in interpretation is mistaken and neither that have already been determined to be
§ 81.75(b)(3) which states, ‘‘[t]he the 2005 Proposed Rule nor this final proprietary, upon HUD’s determination
Secretary will evaluate the age of the rule contain a ‘‘time release provision.’’ that the data field in question will no
data as one of the relevant factors that While HUD’s consideration of the longer be afforded proprietary status; (2)
may be considered under 24 CFR regulatory factors in § 81.74(b) could proprietary data that are at least five
81.74(b)(6).’’ (Emphasis added.) potentially result in the release of years old; and (3) aggregated data
Second, HUD has amended the certain GSE mortgage data after five derived from historical proprietary loan-
regulatory factors that the Secretary years, the Secretary may well determine level data that would be released upon
considers when determining the that other mortgage data should be kept HUD’s determination that the data is not
proprietary status of mortgage data confidential for 10, 20, or even 50 years. proprietary in aggregated form.
under § 81.74(b)(6) to specifically Moreover, regardless of HUD’s Fannie Mae stated further that, absent
include a reference to the age of the determination under § 81.75(b)(3) with explicit authorization by Congress, no
mortgage data. This second amendment respect to any particular mortgage data government agency has statutory
is intended to further clarify that the element, HUD will not implement its authority to issue regulations that have
Secretary’s consideration of the age of determination until it has completed an a ‘‘retroactive effect’’ and that Congress
mortgage data under § 81.75(b)(3) is just analysis of the mortgage data under the did not grant HUD explicit authority to
one of the regulatory factors that must six regulatory factors in § 81.74(b) and promulgate such rules when it enacted
be evaluated. fully complied with the due process FHEFSSA. In addition, Fannie Mae
While Freddie Mac may contend that procedures described in this final rule. claimed that the courts, in determining
its data are qualitatively superior to HUD believes that its re-evaluation of whether a measure has retroactive
mortgage data that can be purchased GSE proprietary mortgage data to ensure effect, consider ‘‘whether it would
from a data broker over the Internet that these data continue to qualify as impair rights a party possessed when he
because ‘‘borrowers provided this proprietary is fully consistent with the acted, increase a party’s liability for past
information to a mortgage lender under Secretary’s affirmative duty and conduct, or impose new duties with
penalty of federal law,’’ this reasoning obligation under section 1323 of respect to transactions already
would presumably support treating all FHEFSSA to ‘‘make available to the completed.’’ (Citing Georgetown
GSE mortgage data as proprietary and public * * *’’ the data submitted by Hospital v. DirectTV, Inc. v. Federal
preclude HUD from releasing any such [the GSEs under their charter acts],’’ Communications Commission, 110 F.3d
data to the public. Such an outcome except for mortgage data that are 816, 825–826 (D.C. Cir. 1997).) Fannie
would be clearly untenable and proprietary. Mae maintained that, based upon a
inconsistent with HUD’s statutory HUD reiterates, as it previously noted consideration of these factors, the 2005
obligation under FHEFSSA to disclose in the 2005 Proposed Rule, that the Proposed Rule would, when
the GSEs’ non-proprietary mortgage data addition of § 81.75(b)(3) to govern the implemented, have a retroactive effect
to the public. release of certain mortgage data that because the GSEs submit their
With regard to Freddie Mac’s have aged a minimum of five years does proprietary data to HUD with the
assertion that the Gramm-Leach-Bliley not limit HUD’s current ability under ‘‘reasonable expectation that the data
Act constitutes implicit federal § 81.75 to seek, at any time, to reclassify will remain proprietary indefinitely,’’
recognition that financial institution GSE mortgage data from proprietary to and that HUD’s release of this data will
information is ‘‘significantly more non-proprietary status. This is because place the GSEs at a competitive
sensitive’’ than information available § 81.75(b)(3), as added by this final rule, disadvantage in the market and impair
through other public sources, HUD deals only with the reclassification and their property rights in their historical
notes that Congress has enacted a very release of aged GSE mortgage data. This mortgage data.
specific statutory regime in section 1323 provision is independent of, and does HUD Determination. HUD has
of FHEFSSA that requires the Secretary not remove or limit, HUD’s existing considered Fannie Mae’s comments
to disclose to the public the GSEs’ non- authority under § 81.75 (§ 81.75(b)(1) of and, for the reasons discussed below,
proprietary mortgage data. Since the this final rule) to modify a prior disagrees that the current rulemaking
GSEs derive their mortgage data from proprietary determination by has a ‘‘retroactive effect.’’
the financial institutions/mortgage reclassifying GSE mortgage data as non- Initially, HUD notes that the GSEs, as
sellers from whom they purchase the proprietary. (See HUD’s prior discussion federally chartered corporations, submit
mortgages, the enactment of section of this matter in the 2005 Proposed Rule their mortgage data to HUD because of
1323 of FHEFSSA reflects the clear at 70 FR 1774, 1778.) a statutory obligation imposed upon
intent of Congress to ensure and (For a discussion of how HUD’s them by their charter acts. (See section
regulate the public disclosure of non- release of GSE mortgage data under 309(m) of the Fannie Mae Charter Act,
proprietary financial institution § 81.75(b)(3) compares with the release 12 U.S.C. 1723a(m), and section 307(e)

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69028 Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations

of the Freddie Mac Act, 12 U.S.C. virtue of HUD’s statutory obligations in More specifically, Fannie Mae noted
1456(e).) HUD, as the GSEs’ housing section 1323 of FHEFSSA, HUD’s that section 1323(b)(1) of FHEFSSA
mission regulator, has a statutory regulatory authority in 24 CFR 81.75 to prohibits the Secretary from releasing to
obligation under section 1323 of amend prior proprietary determinations, the public data that the Secretary has
FHEFSSA to release the GSEs’ non- and the conditional nature of HUD’s determined to be proprietary. Since all
proprietary mortgage data and AHAR prior orders—that HUD’s proprietary of the historical data that HUD advised,
information to the public. The determinations are conditional in nature in the 2005 Proposed Rule, would be
legislative history of FHEFSSA and may be modified and superseded. released following the effective date of
expressly provides that ‘‘* * * every The GSEs are entitled to due process this final rule has already been
effort should be made to provide public before HUD can modify any prior determined by the Secretary to be
disclosure of the information required to proprietary determination, and this final proprietary, Fannie Mae asserted that
be collected and/or reported to the rule ensures that the GSEs are provided HUD’s release of this historical data
regulator [HUD] consistent with the with both notice and an opportunity to would violate FHEFSSA.
exemption for proprietary data.’’ 11 The comment on any proposed Fannie Mae also maintained that
GSEs have been aware of these parallel reclassification of mortgage data or HUD’s release of this historical data
statutory obligations as they have AHAR information. In addition, the would violate HUD’s regulations. The
continued to submit their mortgage data GSEs have the right to receive HUD’s GSE noted that 24 CFR 81.74(b) requires
to HUD over the years. written analysis of any proposed HUD to apply six factors when making
Moreover, since 1995 when HUD first reclassification of mortgage data a determination of whether to accord
promulgated regulations establishing element(s) or AHAR information under proprietary treatment to mortgage data
requirements governing the GSEs (60 FR the regulatory factors in 24 CFR or AHAR information, ‘‘[e]xcept as
61888, December 1, 1995), HUD’s public 81.74(b), and to seek judicial recourse provided in paragraph [81.74](c)
use database regulations at 24 CFR 81.75 during a ten-working-day period before * * *.’’ (Emphasis added.) Fannie Mae
have expressly stated that ‘‘[t]he HUD will release the mortgage data or asserted that the exception carved out in
Secretary may modify the list [of HUD AHAR information to the public. (See § 81.74(c) means that the Secretary must
proprietary determinations] by the discussion of procedural safeguards grant a request for proprietary treatment
regulation or order.’’ HUD has also governing the release of GSE historical where ‘‘the request for proprietary
stated, in each of the proprietary mortgage data later in this preamble.) treatment pertains to mortgage data or
determination orders that it has issued HUD believes that these procedural AHAR information that has been
since 1995, that the order will remain deemed proprietary by the Secretary
safeguards provide a reasoned and
effective until such time as it is under a temporary order, final order, or
balanced approach that will enable it to
determined necessary or appropriate to regulation in effect * * *.’’ Fannie Mae
carry out its twin statutory
withdraw or modify it. claimed that since all of the historical
responsibilities of making ‘‘* * * every
In light of the above express statutory data that HUD stated it would release
effort * * * to provide public
and regulatory framework, and the following the effective date of this final
disclosure of the information required to
notice provided to the GSEs in each of rule are subject to an effective final
be collected and/or reported to [HUD]
HUD’s prior orders that the proprietary order finding the data to be proprietary,
consistent with the exemption for
determinations could be withdrawn or the Secretary does not have the
proprietary data.’’ 12
modified ‘‘as * * *’’ determined authority to apply the new provisions of
necessary or appropriate,’’ HUD cannot Comment: GSE historical data § 81.75(b) and (c) to this historical data
agree with Fannie Mae that the GSEs continue to be legally protected from as the proposed rule appears to
have submitted their mortgage data to disclosure; Discussion of applicable contemplate.
HUD with a ‘‘reasonable expectation’’ procedures. Fannie Mae objected to Fannie Mae also claimed that FOIA
that the data previously determined by HUD’s statement in the proposed rule and HUD’s implementing regulations
HUD to be proprietary will remain that it intended to release historical protect from disclosure data that HUD
proprietary indefinitely. ‘‘GSE mortgage data that HUD has has determined to be proprietary.
There is no question that the GSEs determined to be non-proprietary for the Fannie Mae asserted that matters
have a legitimate property right in years 1993 through 2003, including GSE ‘‘specifically exempted from disclosure
mortgage data that qualify, in fact, as mortgage data that HUD has determined by statute’’ may not be released where
proprietary information, and that HUD in the 2004 Final Order to be non- the statute: ‘‘(A) requires that the
is statutorily required by section 1326 of proprietary.’’ (See 70 FR 1777.) In matters be withheld from the public in
FHEFSSA to ensure that such data are addition to Fannie Mae’s assertion that such a manner as to leave no discretion
not released to the public. However, the HUD’s release of this historical data on the issue; or (B) establishes particular
GSEs do not have a permanent and constitutes ‘‘retroactive rulemaking’’ criteria for withholding or refers to
incontrovertible property right in (see HUD’s determination in response to particular types of matters to be
mortgage data simply because HUD, at this comment, above), Fannie Mae withheld.’’ Fannie Mae maintained that
a prior point in time, made a raised a number of other arguments in FHEFSSA satisfies both prongs of this
determination that such data are support of why it believes HUD’s release FOIA test since it protects historical
proprietary. of this historical data would be data that have been designated
As previously noted, the GSEs submit unlawful. proprietary by HUD, and since
their mortgage data to HUD because Initially, Fannie Mae asserted that FHEFSSA also prohibits the Secretary
they are statutorily obligated to do so FHEFSSA, HUD’s regulations, FOIA, from releasing proprietary data.
and they, in turn, have received and the Trade Secrets Act, 18 U.S.C. Fannie Mae also asserted that the
numerous benefits as a result of their 1905, all compel HUD to continue to historical mortgage data that HUD
federally chartered status as GSEs. The protect data subject to an order would release are protected by the
GSEs have also been on notice—by determining such data to be proprietary. Trade Secrets Act, which prohibits the
unauthorized disclosure of a wide range
11 See S. Rep. No. 102–282, 102nd Cong., 2d Sess. 12 See S. Rep. No. 102–282, 102nd Cong., 2d Sess. of information by Federal officials,
40 (1992). 40 (1992). including confidential commercial or

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financial information, statistical reclassified as non-proprietary, but only a regulatory bar on the Secretary’s
information, and information that prohibits HUD’s release of the GSEs’ authority to release some or all of the
would disclose the amount or source of proprietary data. GSEs’ reclassified, non-proprietary
income, profits, or losses. Fannie Mae As noted, Fannie Mae also asserts that historical mortgage data.
stated that the Trade Secrets Act HUD’s release of the 1993–2003 HUD also does not agree with Fannie
restricts ‘‘formal agency action’’ and historical data pertaining to the Mae that its historical mortgage data
applies even to actions approved by an mortgage data elements that were that are reclassified as non-proprietary
agency head. Fannie Mae maintained granted proprietary status under HUD’s are protected from disclosure by FOIA.
that application of the procedures in the 1996 final order (the 1996 Final Order) For the reasons already discussed above,
2005 Proposed Rule, as currently would violate 24 CFR 81.74(c). This HUD does not believe that mortgage
drafted, and HUD’s release of its HUD regulatory provision states that data elements that the Secretary has
historical mortgage data, could ‘‘[w]here the request for proprietary determined, by official agency action, to
constitute a violation of the Trade treatment pertains to mortgage data or reclassify as non-proprietary will
Secrets Act because the data to be AHAR information that has been nevertheless retain into perpetuity their
released ‘‘are of the type’’ covered by deemed proprietary by the Secretary prior proprietary designation. Not only
the Trade Secrets Act and have already under a temporary order, final order, or does such an interpretation contradict
been deemed proprietary under HUD’s regulation in effect, the Secretary shall the clear legislative history to
statutory mandate and effective grant the request with respect to any FHEFSSA, quoted earlier, which
regulations. mortgage data or AHAR information strongly supports HUD’s release to the
Fannie Mae further stated that HUD which comes within the order or public of the GSEs’ non-proprietary
failed to include in the 2005 Proposed regulation.’’ (Emphasis added.) Fannie data, but it also contradicts a reasonable
Rule a ‘‘reconsideration’’ of the factors Mae maintains that since all of the interpretation of HUD’s prior public use
in 24 CFR 81.74(b) that HUD is required historical data are subject to an effective database orders.
to consider before it can determine that final order finding the data to be Moreover, HUD does not agree with
the 1993–2003 historical data are no proprietary, the Secretary does not have Fannie Mae that its release of the GSEs’
longer proprietary. For this reason, the authority to apply the new historical mortgage data in accordance
Fannie Mae asserted that HUD has no provisions of § 81.75(b) and (c) to this with the procedures described in this
authority to release this historical data historical data as the proposed rule final rule would violate the Trade
to the public after the effective date of appears to contemplate. Secrets Act. The Trade Secrets Act
this final rule. HUD does not agree with Fannie provides, in part, that:
HUD Determination. After a thorough Mae’s interpretation of 24 CFR 81.74(c).
Whoever, being an officer or employee of
consideration of each of Fannie Mae’s This provision essentially means that
the United States or of any department or
comments, HUD has concluded that it the Secretary must honor any GSE agency thereof * * * publishes, divulges,
has the legal authority to release the request for proprietary treatment with discloses, or makes known in any manner or
GSEs’ historical mortgage data in respect to mortgage data or AHAR to any extent not authorized by law any
accordance with the procedures set information that have been determined information coming to him in the course of
forth in this final rule. HUD’s reasoning, by the Secretary to be proprietary under his employment or official duties or by
and its response to each of Fannie Mae’s an order or regulation ‘‘in effect.’’ HUD’s reason of any examination or investigation
comments, is set out below. 1996 Final Order granted proprietary made by, or return, report or record made to
With regard to Fannie Mae’s comment status to the mortgage data elements that or filed with, such department or agency or
officer or employee thereof, which
that section 1323(b)(1) of FHEFSSA HUD subsequently reclassified as non- information concerns or relates to the trade
prohibits the Secretary from releasing to proprietary in its 2004 Final Order. secrets, processes, operations, style of work,
the public data that the Secretary has However, the 2004 Final Order was or apparatus, or to the identity, confidential
determined to be proprietary, HUD limited, by its terms, to the prospective statistical data, amount or source of any
notes that section 1326 of FHEFSSA release of these mortgage data elements. income, profits, losses, or expenditures of
broadly confers on the Secretary the HUD intends, following the publication any person, firm, partnership, corporation, or
authority to determine, through either of this final rule, to initiate proceedings association * * * shall be fined under this
regulation or order, ‘‘that certain under § 81.75(b)(2) to reclassify as non- title, or imprisoned not more than one year,
information shall be treated as proprietary some or all of these or both; and shall be removed from office or
employment. (Emphasis added.)
proprietary information and not subject mortgage data elements in prior years’
to disclosure under section 1323.’’ public use databases. These proceedings HUD notes initially that its regulations
Inherent in this authority is the will be conducted in accordance with at 24 CFR 81.2 define the term
Secretary’s authority to reconsider and § 81.75(d), which includes a ‘‘[p]roprietary information’’ to mean ‘‘all
modify a prior determination that requirement that the Secretary analyze mortgage data and all AHAR
information is proprietary. This each data element that is proposed to be information that the GSEs submit to the
inherent authority is expressed in reclassified under the regulatory factors Secretary in the AHARs that contain
HUD’s existing regulations at 24 CFR in 81.74(b), and provide notice in trade secrets or privileged or
81.75, which authorize HUD to make a writing to each GSE of his confidential, commercial, or financial
determination that mortgage data or determination under these factors. In information that, if released, would be
AHAR information are proprietary the event that the Secretary determines likely to cause substantial competitive
under FHEFSSA and to issue a list that some or all of these data elements harm.’’ (Emphasis added.) Thus, when
providing that certain information shall no longer qualify as proprietary the Secretary conducts a regulatory
be treated as proprietary information, information, an order will be issued analysis to determine whether GSE
but also expressly authorizing the withdrawing and modifying the 1996 mortgage data or AHAR information are
Secretary to ‘‘modify the list by Final Order, as expressly authorized by proprietary based on the criteria in 24
regulation or order.’’ Consequently, that Order. In such case, the 1996 Final CFR 81.74(b), he or she considers
FHEFSSA does not act as a statutory bar Order would no longer be ‘‘in effect’’ whether the data or information qualify
to prohibit HUD’s release of GSE with respect to the reclassified data as a trade secret, the release of which
mortgage data that HUD has properly elements and § 81.74(c) would not act as would be likely to cause substantial

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69030 Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations

competitive harm. The Secretary will of aged data), and 81.75(c) (release of proprietary loan-level mortgage data
not reclassify as non-proprietary aggregated data). HUD’s 2005 Proposed will be released to the public ‘‘both
mortgage data or AHAR information that Rule contemplated that these regulatory prospectively and for all prior years,
the Secretary determines qualify as a provisions would apply only to GSE unless otherwise provided by the
trade secret and which, if released, mortgage data, and this same scope of Secretary.’’ (Emphasis added.)
would be likely to cause substantial coverage is retained in this final rule. HUD believes that these corrections
competitive harm because, by While AHAR information is subject to are necessary to clarify that HUD’s non-
definition, such a trade secret qualifies modification of proprietary status under proprietary determinations are
under HUD’s regulations as ‘‘proprietary § 81.75(b)(1), either by regulation or by ‘‘effective’’ both with respect to prior
information.’’ order following the procedures in years’’ data that it has previously
Consequently, when the Secretary § 81.75(d), this is consistent with HUD’s classified as proprietary, as well as to
makes a determination, based on the existing authority under 81.75, and does future years’ data. HUD believes that the
standards in § 81.74(b) and the not expand upon that authority. reference in the proposed rule to the
requirements of §§ 81.75(b)(2) and HUD has also made a technical ‘‘effective date’’ of the Secretary’s
81.75(d), that particular GSE mortgage correction in § 81.75 of this final rule to determination could potentially confuse
data elements do not qualify as reinstate a word that was omitted in the this point and, accordingly, HUD has
proprietary information and, thus, may 2005 Proposed Rule. Currently, § 81.75 made the clarifying changes described
be released to the public, his or her states that, following a determination by herein. These changes are fully
subsequent disclosure of that the Secretary that mortgage data or consistent with HUD’s substantive
information is not actionable under the AHAR information is ‘‘proprietary proposals in the proposed rule to permit
Trade Secrets Act because it is fully information,’’ the Secretary shall issue the release of prior years’ data following
‘‘authorized by law.’’ an order or regulation withholding the a Secretarial determination that the GSE
data or information from public mortgage data or AHAR information are
III. Other Changes in This Final Rule
disclosure. Thereafter, this section states not proprietary.
HUD has also, at its own initiative, that the Secretary may issue a list
made three technical clarifications to providing that certain information shall IV. Findings and Certifications
§§ 81.75(b)(1), (b)(2), and 81.75(c) at this be treated as ‘‘proprietary information.’’
final rule stage. Executive Order 12866. The Office of
In the 2005 Proposed Rule, the word Management and Budget (OMB)
HUD’s existing regulations at § 81.75 ‘‘information’’ was omitted in both of
state that, following a determination by reviewed this final rule under Executive
these regulatory references. Since the Order 12866, Regulatory Planning and
the Secretary that mortgage data or term ‘‘proprietary information’’ is a
AHAR information are proprietary Review, which the President issued on
defined term in § 81.2, HUD has September 30, 1993. OMB determined
under FHEFSSA, the Secretary shall reinstated this term in 81.75(a), with
issue a temporary order, final order, or that this rule is a ‘‘significant regulatory
conforming changes throughout this
regulation withholding the mortgage action’’ as defined in section 3(f) of the
section.
data or AHAR information from the order (although not economically
In the 2005 Proposed Rule, HUD
public-use database and from public indicated in § 81.75(b)(2) that, following significant, as provided in section 3(f)(1)
disclosure by HUD. This provision goes a Secretarial determination to reclassify of the order). Any changes made to the
on to state that the Secretary may, from certain GSE mortgage data as non- final rule subsequent to its submission
time to time, by regulation or order, proprietary, the Secretary would release to OMB are identified in the docket file,
issue a list providing that certain the reclassified, non-proprietary which is available for public inspection
information shall be treated as mortgage data to the public both between 8 a.m. and 5 p.m. weekdays in
proprietary information. The regulation prospectively and for all years the Office of the Rules Docket Clerk,
states that the Secretary ‘‘may modify preceding the effective date of HUD’s Office of General Counsel, Department
the list by regulation or order.’’ In this determination, unless otherwise of Housing and Urban Development,
final rule, HUD has clarified what is provided by the Secretary. Similarly, in 451 Seventh Street, SW., Room 10276,
already implicit in the existing § 81.75(c) of the 2005 Proposed Rule, Washington, DC 20410–0500.
regulation, i.e., that any modification of HUD stated that after the Secretary Paperwork Reduction Act. HUD’s
the list by regulation or order follows determined that certain aggregated data collection of information on the GSEs’
the Secretary’s determination to modify, derived from proprietary loan-level activities has been reviewed and
by regulation or order, a prior mortgage data are not proprietary, the authorized by OMB under the
proprietary determination. aggregated data would be released to the Paperwork Reduction Act of 1995 (44
Accordingly, HUD is providing in public both prospectively and for all U.S.C. 3501–3520), as implemented by
§ 81.75(b)(1) of this final rule that the years preceding the effective date of the OMB in regulations at 5 CFR part 1320.
Secretary may, based on a consideration Secretary’s determination. The OMB control number is 2502–0514.
of the factors in § 81.74(b), ‘‘modify a In this final rule, HUD has removed Environmental Impact. This final rule
previous determination that mortgage the phrase, ‘‘preceding the effective date does not direct, provide for assistance or
data or AHAR information are of the Secretary’s determination’’ from loan and mortgage insurance for, or
proprietary information (and may also both §§ 81.75(b)(2) and 81.75(c). Instead, otherwise govern or regulate, real
make conforming changes to the list HUD provides in § 81.75(b)(2) of this property acquisition, disposition,
designating certain mortgage data or final rule that reclassified, non- leasing, rehabilitation, alteration,
AHAR information as proprietary proprietary mortgage data will be demolition, or new construction; or
information) by regulation or by order released to the public ‘‘both establish, revise, or provide for
* * *’’ HUD does not intend by this prospectively and for all prior years’ standards for construction or
clarification to expand the scope of its public use databases, unless otherwise construction materials, manufactured
proposals in the 2005 Proposed Rule so provided by the Secretary.’’ (Emphasis housing, or occupancy. Accordingly,
that AHAR information also is subject to added.) In addition, HUD states in under 24 CFR 50.19(c)(1), this final rule
the provisions of §§ 81.75(b)(2) (release § 81.75(c) that non-proprietary is categorically excluded from
of prior years’ data), 81.75(b)(3) (release aggregations of data derived from environmental review under the

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National Environmental Policy Act of § 81.74 Secretarial determination on GSE may lose their proprietary status if they
1969 (42 U.S.C. 4321). request. are at least five years old (as measured
Regulatory Flexibility Act. The * * * * * from the end of the calendar year to
undersigned, in accordance with the (b) * * * which the mortgage data pertain). The
Regulatory Flexibility Act (5 U.S.C. (6) Such additional facts and legal and Secretary will evaluate the age of the
605(b)), has reviewed this rule before other authorities as the Secretary may data as one of the relevant factors that
publication and by approving it certifies consider appropriate, including the age may be considered under 24 CFR
that this rule would not have a of the mortgage data (see 24 CFR 81.74(b)(6). If the Secretary determines
significant economic impact on a 81.75(b)(3)), or the extent to which that such aged mortgage data have lost
substantial number of small entities. particular mortgage data or AHAR their proprietary status, these data shall
This final regulation is applicable only information, when considered together be released publicly.
to the GSEs, which are not small entities with other information, could reveal (c) Release of aggregated data derived
for purposes of the Regulatory proprietary information. from proprietary loan-level data. The
Flexibility Act, and, thus, does not have * * * * * Secretary may, based upon a
a significant economic impact on a ■ 3. Section 81.75 is revised to read as consideration of the factors in § 81.74(b)
substantial number of small entities. follows: and using the procedures in paragraph
Executive Order 13132, Federalism. (d) of this section, determine that
Executive Order 13132 (‘‘Federalism’’) § 81.75 Proprietary information withheld certain aggregated data derived from
by order or regulation. proprietary loan-level mortgage data are
prohibits, to the extent practicable and
permitted by law, an agency from (a) Secretarial determination of not proprietary. If the Secretary makes
promulgating a regulation that has proprietary classification. Following a such a determination, then the
federalism implications and either determination by the Secretary that aggregated data shall be released to the
imposes substantial direct compliance mortgage data or AHAR information are public both prospectively and for all
costs on state and local governments proprietary information under prior years, unless otherwise provided
and is not required by statute, or FHEFSSA, the Secretary shall by the Secretary.
preempts state law, unless the relevant expeditiously issue a temporary order, (d) Procedures. The following
requirements of section 6 of the final order, or regulation withholding procedures apply to the Secretary’s
Executive Order are met. This final rule the mortgage data or AHAR information issuance of an order in connection with
does not have federalism implications from the public-use database and from a determination under paragraph (b)(1)
and does not impose substantial direct public disclosure by HUD in accordance or (c) of this section:
with 12 U.S.C. 4546. The Secretary may, (1) The Secretary shall provide each
compliance costs on state and local
from time to time, by regulation or GSE with written notice of the mortgage
governments or preempt state law
order, issue a list providing that certain data, AHAR information or aggregated
within the meaning of the Executive
mortgage data or AHAR information data proposed to be released, and an
Order.
shall be treated as proprietary opportunity to submit written
Unfunded Mandates Reform Act. Title
information. comments. The Secretary may also
II of the Unfunded Mandates Reform
(b) Modification of proprietary provide each GSE with an opportunity
Act of 1995 (12 U.S.C. 1531–1538)
classification. (1) General. The Secretary for a meeting with HUD to discuss the
(UMRA) establishes requirements for
may, based upon a consideration of the proposed release of mortgage data,
federal agencies to assess the effects of
factors in § 81.74(b), modify a previous AHAR information, or aggregated data;
their regulatory actions on state, local,
determination that mortgage data or (2) The Secretary shall make a
and tribal governments, and the private
AHAR information are proprietary determination regarding the proposed
sector. This final rule would not impose
information (and may also make release of the GSE mortgage data, AHAR
any federal mandates on any state, local,
conforming changes to the list information, or aggregated data based
or tribal governments, or on the private
designating certain mortgage data or upon a consideration of the data or
sector, within the meaning of UMRA.
AHAR information as proprietary information under the standards set
List of Subjects in 24 CFR Part 81 information) by regulation, or by order forth in 24 CFR 81.74(b) and the GSEs’
Accounting, Federal Reserve System, using the procedures described in written and oral objections, if any, to the
Mortgages, Reporting and recordkeeping paragraph (d) of this section, as proposed release of such mortgage data,
requirements, Securities. applicable. AHAR information, or aggregated data;
(2) Release of data following a (3) The Secretary shall provide notice
■Accordingly, 24 CFR part 81 is modification of proprietary in writing to each GSE of the Secretary’s
amended as follows: classification. Following the Secretary’s determination and the reasons under
determination under paragraph (b)(1) of § 81.74(b) for his or her determination.
PART 81—THE SECRETARY OF HUD’S this section to modify a previous If the Secretary determines that the
REGULATION OF THE FEDERAL proprietary determination by mortgage data, AHAR information, or
NATIONAL MORTGAGE ASSOCIATION reclassifying certain mortgage data as aggregated data may be released, the
(FANNIE MAE) AND THE FEDERAL non-proprietary, the Secretary shall notice will also provide that the
HOME LOAN MORTGAGE release the reclassified, non-proprietary Secretary shall not release the mortgage
CORPORATION (FREDDIE MAC) mortgage data to the public both data, AHAR information, or aggregated
■ 1. The authority citation for 24 CFR prospectively and for all prior years’ data to the public for 10 working days;
part 81 continues to read as follows: public use databases, unless otherwise (4) The Secretary shall, no earlier than
provided by the Secretary. the end of the ten-working-day period
Authority: 12 U.S.C. 1451 et seq., 1716– (3) Release of aged data. The referred to in paragraph (d)(3) of this
1723h, and 4501–4641; 42 U.S.C. 3535(d) and
3601–3619.
Secretary may determine, through case- section, publish an order in the Federal
by-case consideration of individual data Register notifying the public of the
■ 2. Section 81.74 is amended by elements under paragraph (b)(1) of this Secretary’s determination to release the
revising paragraph (b)(6) to read as section, that certain mortgage data mortgage data or AHAR information that
follows: previously determined to be proprietary has been reclassified as non-proprietary

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69032 Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations

and/or to release certain non-proprietary reclassification of the mortgage data or Dated: October 17, 2005.
aggregations of data derived from AHAR information. The Secretary shall Brian D. Montgomery,
proprietary loan-level mortgage data. omit from the published order any Assistant Secretary for Housing-Federal
The order will also modify the list information that would reveal Housing Commissioner.
described in paragraph (a) of this proprietary information. [FR Doc. 05–22420 Filed 11–9–05; 8:45 am]
section to reflect the Secretary’s BILLING CODE 4210–27–P

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