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###### Federal Trade Commission

# AGENCY:

Federal Trade Commission (“FTC”). 

# ACTION:

Notice. 

# SUMMARY:

The information collection requirements described below will be submitted to the Office of Management and Budget (“OMB”) for review, as required by the Paperwork Reduction Act (“PRA”). The FTC is seeking public comments on its proposal to extend through December 31, 2005 the current PRA clearance for information collection requirements for its Mortgage Disclosure Study. That clearance expires on November 30, 2004. 

# DATES:

Comments must be submitted on or before November 29, 2004. 

# ADDRESSES:

                        Interested parties are invited to submit written comments. Comments should refer to “Mortgage Disclosure Study—FTC File No. P025505,” to facilitate the organization of comments. A comment filed in paper form should include this reference both in the text and on the envelope and should be mailed or delivered to the following address: Federal Trade Commission/Office of the Secretary, Room H-159 (Annex X), 600 Pennsylvania Avenue, NW., Washington, DC 20580. The FTC is requesting that any comment filed in paper form be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Alternatively, comments may be filed in electronic form (in ASCII format, WordPerfect, or Microsoft Word) as part of or as an attachment to e-mail messages directed to the following e-mail box:                         *MortgageDS@ftc.gov*                        . If the comment contains any material for which confidential treatment is requested, it must be filed in paper form, and the first page of the document must be clearly labeled “Confidential.”[1] 

                        The FTC Act and other laws the Commission administers permit the collection of public comments to consider and use in this proceeding as                               ( print page 57933)                            appropriate. All timely and responsive public comments will be considered by the Commission, and will be available to the public on the FTC Web site, to the extent practicable, at                         *http://www.ftc.gov*. As a matter of discretion, the FTC makes every effort to remove home contact information for individuals from the public comments it receives before placing those comments on the FTC Web site. More information, including routine uses permitted by the Privacy Act, may be found in the FTC's privacy policy, at                         *http://www.ftc.gov/​ftc/​privacy.htm*.                     

# FOR FURTHER INFORMATION CONTACT:

                        Requests for additional information should be addressed to James M. Lacko, Economist, Bureau of Economics, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580. Telephone: (202) 326-3387; e-mail                         *jlacko@ftc.gov*.                     

# SUPPLEMENTARY INFORMATION:

Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. “Collection of information” means agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. 44 U.S.C. 3502(3), 5 CFR 1320.3(c). As required by section 3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for public comment before requesting that OMB extend the existing paperwork clearance for the Mortgage Disclosure Study (OMB Control Number 3084-0126). 

                    The FTC invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,                     *e.g.*, permitting electronic submission of responses.                 

                    Recent deceptive lending cases at the FTC and elsewhere suggest that consumers who do not understand the terms of their mortgages can be subject to deception, that deception can occur even when consumers receive the disclosures required by the Truth-in-Lending Act, 15 U.S.C. 1601*et seq.*                     (TILA), and that deception about mortgage terms can result in substantial consumer injury.                 

Despite a long history of mortgage disclosure requirements and many new legislative and regulatory proposals regarding disclosures, little empirical evidence exists to document the effect of current disclosures on consumer understanding of mortgage terms, consumer mortgage shopping behavior, or consumer mortgage choice.

The FTC intends to conduct consumer research to examine: (1) How consumers search for and choose mortgages; (2) how consumers use and understand information about mortgages, including required disclosures; and (3) whether improved disclosures might improve consumer understanding, consumer mortgage shopping, and consumers' ability to avoid deception. The research also may assist the targeting of the FTC's enforcement actions by identifying areas most prone to consumer misunderstanding and lender deception and may help refine disclosure remedies imposed on deceptive lenders. 

## 1. Description of the Collection of Information and Proposed Use 

The FTC proposes to conduct this study in two phases: (1) A qualitative research phase; and (2) a quantitative research phase. The qualitative research phase will include focus groups and in-depth interviews. The quantitative research will include copy tests of current and alternative disclosures. Results from the first phase will be used to refine the design of the second phase. 

                    The qualitative-phase focus groups will be completed under the current PRA clearance and are not part of this extension request.[2]                                          The qualitative-phase in-depth interviews may be completed under the current clearance, but scheduling considerations make this uncertain. The quantitative-phase copy tests will not be started before the expiration of the current clearance. Accordingly, this extension request covers information collection for the in-depth interviews and copy tests.                 

The in-depth interviews will be conducted with 36 consumers who have recently completed a mortgage transaction. Respondents will be asked to bring their loan documents to the interview. Half of the interviews will be with consumers who obtained their mortgage from a prime lender and half will be consumers who obtained their mortgage from a subprime lender. The purpose of the interviews is to gain in-depth knowledge of the extent to which consumers use, search for, and understand mortgage information—including information about their own recent loans. 

The quantitative research phase will consist of copy test interviews of 800 consumers who entered into a mortgage transaction within the previous two years. If possible, approximately half of the respondents will be consumers who obtained their mortgage from a prime lender and half will be consumers who obtained their mortgage from a subprime lender. The purpose of the copy tests will be to examine whether alternative disclosures can improve consumer understanding of mortgage terms and help to reduce potential deception about mortgage offers. The findings from the focus groups and in-depth interviews will be used to refine the alternative disclosures used in the copy tests. 

All information will be collected on a voluntary basis and consumers will receive usual and customary compensation for their participation. For the qualitative research the FTC has contracted with a consumer research firm to locate eligible borrowers, recruit respondents, moderate the focus groups, conduct the interviews, and write a report of the findings. For the quantitative research the FTC has contracted with a consumer research firm to locate eligible borrowers, recruit respondents, conduct the copy tests, and write a brief methodological report. The results will assist the FTC in determining how required disclosures and other information affects consumers' ability to understand the cost and features of mortgages. This understanding will further the FTC's mission of protecting consumers and competition in this important market. 

## 2. Estimated Hours Burden 

### Qualitative Research 

                    Approximately 36 one-hour long, in-depth interviews will be conducted. If all respondents are single decision makers, this would amount to a 36 hour burden. However, some of the interviews may include couples. Assuming that half of the interviews include couples (the upper bound offered by the contractor), the hours burden for the in-depth interviews would increase to 54 hours ((18 × 2 hours) + (18 × 1 hour)).                           ( print page 57934)    

### Quantitative Research 

                    Approximately 800 consumers who engaged in a mortgage transaction during the previous two years will participate in the quantitative phase of the research. Each copy test interview will take roughly 20-30 minutes. The estimated hours burden for the quantitative research ranges from 267 hours (800 respondents ×                     1/3                     hour per respondent) to 400 hours (800 respondents ×                     1/2                     hour per respondent).                 

### Total 

The total estimated hours burden for both phases of the study ranges from 303 hours (36 hours + 267 hours) to 454 hours (54 hours + 400 hours). The hours burden due to the qualitative focus groups (40 hours) have not been included in this estimate because the focus groups will be completed under the current clearance. 

William E. Kovacic,

General Counsel. 

# Footnotes

1.                                 Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be accompanied by an explicit request for confidential treatment, including the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. The request will be granted or denied by the Commission's General Counsel, consistent with applicable law and the public interest.                             *See*                             Commission Rule 4.9(c), 16 CFR 4.9(c).                        
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2.                             The focus groups will be used to examine how well consumers understand mortgage terms, how consumers shop for mortgages, if consumers recognize features of a mortgage offer that may significantly increase the cost of the loan, and whether consumers use and understand required disclosures.                    
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[FR Doc. 04-21687 Filed 9-27-04; 8:45 am] 

BILLING CODE 6750-01-P