69022 Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 

1HUD defines the term ‘‘mortgage data’’ at 24 

CFR 81.2 to mean ‘‘data obtained by the Secretary 

from the GSEs under subsection 309(m) of the 

Fannie Mae Charter Act and subsection 307(e) of 

the Freddie Mac Charter Act.’’ 

2HUD’s regulations at 24 CFR 81.2 define the 

term ‘‘proprietary information’’ to mean ‘‘all 

mortgage data and all AHAR information that the 

GSEs submit to the Secretary in the AHARs that 

contain trade secrets or privileged or confidential, 

commercial, or financial information that, if 

released, would be likely to cause substantial 

competitive harm.’’ 

3 In addition to FHEFSSA’s prohibition on the 

disclosure of GSE proprietary information, HUD’s 

regulations at 24 CFR 81.72(c)(1) prohibit the 

release of certain types of mortgage data and AHAR 

information, including mortgage data and AHAR 

information that would ‘‘constitute a clearly 

unwarranted invasion of personal privacy if such 

data or information were released to the public’’ 

(citing 24 CFR 81.72(b)(3)) or that are ‘‘required to 

be withheld or * * * [that are] not appropriate for 

public disclosure under other applicable laws and 

regulations, including the Trade Secrets Act * * * 

and Executive Order 12600’’ (citing 24 CFR 

81.72(b)(4)). 

4The exception set forth in paragraph (2) of 

section 1323(b) of FHEFSSA states that the 

Secretary may not restrict access to GSE singlefamily mortgage data submitted to the Secretary 

under section 309(m)(1)(A) of the Fannie Mae 

Charter Act or section 307(e)(1)(A) of the Freddie 

Mac Act relating to ‘‘the income, census tract 

location, race, and gender of mortgagors under such 

mortgages.’’ 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 81 

[Docket No. FR–4947–F–02] 

RIN 2501–AD09 

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) 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Final rule. 

SUMMARY: This final rule amends HUD’s 

regulations to permit the release to the 

public of certain data and information 

that have been, and will be, submitted 

to HUD by the Federal National 

Mortgage Association (Fannie Mae) and 

the Federal Home Loan Mortgage 

Corporation (Freddie Mac) (collectively, 

the government sponsored enterprises, 

or GSEs). These amendments allow for 

the release of GSE mortgage data that 

fall into three categories, as identified in 

HUD’s proposed rule. The first category 

involves HUD’s public release of GSE 

mortgage data that the Secretary, by 

regulation or order, reclassifies from 

proprietary to non-proprietary status. 

Following the Secretary’s determination 

to reclassify such data as nonproprietary, HUD will release the GSE 

mortgage data to the public both 

prospectively and for all preceding 

years’ public use databases. The second 

category involves HUD’s public release 

of certain GSE aggregated data derived 

from proprietary loan-level mortgage 

data that the Secretary determines are 

not proprietary when presented in 

aggregated form. Following the 

Secretary’s determination that such 

aggregations of GSE data are not 

proprietary, HUD will release the data to 

the public both prospectively and for all 

preceding years. The third category 

involves the release of certain GSE 

mortgage data that are at least five years 

old that the Secretary determines, by 

regulation or order, to re-classify from 

proprietary to non-proprietary status 

because of the passage of time. This 

final rule provides that such data may, 

as determined by the Secretary on a 

case-by-case basis, lose proprietary 

status once the data have aged a 

minimum of five years, with the time 

interval for particular data elements to 

be determined by the Secretary. The 

final rule also amends HUD’s 

regulations at 24 CFR 81.75 to 

incorporate the procedures the Secretary 

will use to make determinations under 

each of the above categories and makes 

certain technical and editorial changes 

to 24 CFR 81.74 and 81.75. 

This final rule follows publication of 

a January 10, 2005, proposed rule and 

takes into consideration the public 

comments received in response to the 

proposed rule. 

DATES: Effective Date: December 12, 

2005. 

FOR FURTHER INFORMATION CONTACT: 

Sandra Fostek, Director, Office of 

Government Sponsored Enterprises, 

Office of Housing, Room 3150, 

telephone (202) 708–2224. For questions 

on data, contact John L. Gardner, 

Director, Financial Institutions 

Regulation Division, Office of Policy 

Development and Research, Room 8212, 

telephone (202) 708–1464. For legal 

questions, contact Paul S. Ceja, 

Assistant General Counsel for 

Government Sponsored Enterprises/ 

RESPA, or Sharmeen Dosky, Senior 

GSE/RESPA Division Attorney, Office of 

the General Counsel, Room 9262, 

telephone (202) 708–3137. The address 

for all of these persons is the 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Washington, DC, 20410–0500. Persons 

with hearing and speech impairments 

may access the phone numbers via TTY 

by calling the Federal Information Relay 

Service at (800) 877–8399. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Federal Housing Enterprises 

Financial Safety and Soundness Act of 

1992 (FHEFSSA), Pub. L. 102–550, 

approved October 28, 1992, requires 

HUD to establish and monitor the 

performance of Fannie Mae and Freddie 

Mac in meeting annual goals for 

purchases of mortgages on housing for 

low- and moderate-income families, 

housing located in central cities, rural 

areas, and other underserved areas, and 

special affordable housing (i.e., housing 

meeting the needs of and affordable to 

low-income families in low-income 

areas and very low-income families). 

Fannie Mae submits mortgage data 

and AHAR information to HUD under 

sections 309(m) and (n), respectively, of 

the Fannie Mae Charter Act (12 U.S.C. 

1723a(m) and (n)). Freddie Mac makes 

these submissions to HUD under 

sections 307(e) and (f), respectively, of 

the Freddie Mac Act (12 U.S.C. 1456(e) 

and (f)).1

Section 1323 of FHEFSSA requires 

HUD to make available to the public 

data submitted to HUD by the GSEs 

relating to the GSEs’ mortgage 

purchases. HUD makes much of this 

data available to the public via its GSE 

public use database, compendia, and 

other means. However, the law prohibits 

the Secretary from disclosing mortgage 

data that he or she determines to be 

proprietary.2 Specifically, section 1326 

of FHEFSSA states that the Secretary 

may, by regulation or order, ‘‘provide 

that certain information shall be treated 

as proprietary information and not 

subject to disclosure under section 1323 

of [title 12 of the United States Code], 

section 309(n)(3) of the [Fannie Mae 

Charter Act], or section 307(f)(3) of the 

[Freddie Mac Act].’’ 3

This prohibition on the disclosure of 

proprietary information is repeated in 

section 1323(b)(1) of FHEFSSA, which 

states, in part, that ‘‘* * * the Secretary 

may not make available to the public 

data that the Secretary determines 

pursuant to section 1326 are proprietary 

information.’’ Thus, the Secretary is 

authorized by section 1326 of FHEFSSA 

to make determinations, by regulation or 

order, that certain GSE mortgage data 

are proprietary, except as expressly 

prohibited by section 1323(b)(2) of 

FHEFSSA.4

Under HUD’s regulations at 24 CFR 

81.75, the Secretary issues a temporary 

order, final order, or regulation to 

withhold mortgage data or AHAR 

information from the public use 

database and from public disclosure and 

Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 69023 

5See Appendix F to HUD’s 1995 final housing 

goals rule, which set forth an order identifying the 

list of data elements that HUD had determined 

under section 1326 of FHEFSSA to be proprietary 

and those data elements that it had determined to 

be non-proprietary, at 60 FR 62001–5. 

6See HUD’s final order published on October 17, 

1996 (61 FR 54322). 

7See HUD’s final order published on October 4, 

2004 (69 FR 59476). 

8 Id. at 69 FR 59482. 

may, by regulation or order, issue a list 

providing that certain mortgage data and 

AHAR information shall be treated as 

proprietary information. HUD first 

issued such a list by order in 1995,5

modified it by order in 1996 6 and again 

in 2004.7 In these orders, the list took 

the form of tables that indicated the 

organization and contents of the public 

use databases that were subsequently 

issued by HUD covering the GSEs’

annual purchases since 1993. 

As noted, on October 4, 2004, HUD 

published in the Federal Register a 

notice of final order reclassifying as 

non-proprietary certain loan-level 

mortgage data elements contained in the 

GSEs’ annual loan-level data files that 

will be submitted by the GSEs to HUD 

pursuant to their charter acts (the 2004 

Final Order). The Department’s 

determinations with respect to the 

proprietary status of the mortgage data 

elements were discussed in the 2004 

Final Order. The resulting revised 

structure of the public use database was 

summarized in the revised tables 

attached to the 2004 Final Order as an 

appendix. The 2004 Final Order 

indicated that the Department would, 

beginning in 2005, release the 

reclassified data elements through the 

Department’s public use database 

covering the GSEs’ 2004 mortgage 

purchases and in all future public use 

databases.8

On January 10, 2005, HUD published 

in the Federal Register a proposed rule 

(70 FR 1774) in which it proposed to 

release to the public certain mortgage 

data and aggregated data that have been, 

and will be, submitted to HUD by 

Fannie Mae and Freddie Mac (the 2005 

Proposed Rule). Following are the 

categories of data that HUD proposed to 

release to the public. The reader should 

note that these are the same categories 

that HUD described in the 2005 

Proposed Rule. However, for the sake of 

clarity, HUD is now describing each of 

these three categories separately, rather 

than combining into one category the 

prospective and prior years’ release of 

reclassified mortgage data and 

aggregated data. 

• Prospective and prior years’ release 

of reclassified data. Following a 

Secretarial determination to modify the 

list of proprietary determinations by 

reclassifying certain GSE mortgage data 

as non-proprietary, the Secretary would 

release to the public the reclassified, 

non-proprietary mortgage data both 

prospectively and for all years 

preceding the effective date of HUD’s 

determination, unless otherwise 

provided by the Secretary. This GSE 

mortgage data would be released to the 

public via HUD’s GSE public use 

database. (See 24 CFR 81.75(b)(2).) 

• Prospective and prior years’ release 

of non-proprietary aggregations of data. 

Following a Secretarial determination 

that certain aggregated data derived 

from proprietary loan-level mortgage 

data are not proprietary when presented 

in aggregated form, HUD proposed to 

release to the public the non-proprietary 

aggregations of data both prospectively 

and for all years preceding the effective 

date of the Secretary’s determination, 

unless otherwise provided by the 

Secretary. These aggregations of data 

would be released to the public in the 

form of a compendium, or by other 

means. (See 24 CFR 81.75(c).) 

• Release of non-proprietary aged 

data. Following a Secretarial 

determination to reclassify as nonproprietary certain GSE mortgage data 

included on the list of proprietary 

determinations that are at least five 

years old, HUD proposed to release to 

the public the reclassified aged data. 

Specifically, HUD proposed that data 

classified as proprietary that have aged 

a minimum of five years could be 

subject to reclassification as nonproprietary data for release to the public 

because of the passage of time. HUD 

noted that the time interval for 

particular data elements would be 

determined by the Secretary on a caseby-case basis. (See 24 CFR 81.75(b)(3).) 

HUD sought public comment, in 

particular, on whether five years 

represented a reasonable minimum 

period after which mortgage data might 

lose their proprietary character and, as 

a result, warrant a reconsideration of 

proprietary status under HUD’s 

regulations. Public comment also was 

solicited on whether a longer or shorter 

period should be adopted in the final 

rule, and the point at which the period 

should begin to run. 

II. Discussion of Public Comments 

A. Overview of Comments 

HUD received four public comments 

in connection with the 2005 Proposed 

Rule. Comments were received from the 

National Association of Home Builders 

(NAHB), America’s Community Bankers 

(ACB), Fannie Mae, and Freddie Mac. 

NAHB expressed support for the 2005 

Proposed Rule, stating that the rule 

appropriately balanced the need to 

protect the privacy of borrowers, 

lenders, and the proprietary needs of the 

GSEs, with Congress’ intent to increase 

the transparency and public 

accountability of the GSEs by providing 

the public with as much data as possible 

regarding the GSEs’ mortgage purchases. 

NAHB maintained that the 2005 

Proposed Rule contained valid 

safeguards and measures to protect the 

privacy of consumers and the GSEs’

business platforms. 

ACB expressed support for increased 

transparency and disclosure of GSE data 

to help the public measure the GSEs’

performance against their mission 

responsibilities and against the private 

market. However, ACB also indicated 

that HUD’s proposed reclassification 

and release of additional data might 

subject the GSEs and, as a result, the 

GSEs’ sellers/servicers, to financial and 

competitive harm. 

The GSEs objected to several aspects 

of the 2005 Proposed Rule claiming that 

the rule, if implemented, could result in 

an infringement on the GSEs’ property 

rights in their proprietary data with 

resulting significant competitive harm. 

The GSEs also expressed concerns that 

the rule would result in the release of 

data that could violate consumers’

privacy. 

Following is a more in-depth 

discussion of the public comments, and 

HUD’s determinations in response to the 

comments. 

B. Discussion of Public Comments 

Comment: Proposed regulatory 

procedures fail to provide GSEs with 

due process. Both GSEs asserted that 

HUD’s proposed procedures for 

reclassifying data are inadequate and 

fail to provide the GSEs with due 

process so that they can protect 

important property rights in their 

proprietary data. They maintained that 

the proposed adoption of the procedures 

in 24 CFR 81.74(f)(1) and (2) for 

reclassifications of mortgage data are 

inappropriate when HUD, rather than a 

GSE, is initiating the proprietary 

determination process. 

Fannie Mae also disputed HUD’s 

assertion in the 2005 Proposed Rule that 

the proposed adoption of the procedures 

in § 81.74(f) for use in connection with 

reclassifications of data under § 81.75 

‘‘represents a codification of existing 

practice * * *.’’ Fannie Mae contended 

that, in the past, whenever HUD has 

initiated a reclassification of data, it has 

provided the GSEs with significantly 

more opportunities to analyze, consider, 

and respond in writing to HUD’s 

69024 Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 

proposals than that afforded by 

§ 81.74(f). 

Fannie Mae urged HUD to include in 

the final rule a number of procedural 

protections, including the following: (1) 

HUD would be required, prior to making 

a determination, to notify the GSEs in 

writing of the actual data elements and/ 

or aggregated data that are under 

consideration for release to the public; 

(2) HUD’s written notice would contain 

the basis for the reclassification of the 

data elements and an assessment of the 

factors contained in § 81.74(b); (3) HUD 

would provide the GSEs with a 

minimum of 30 days in which to submit 

written comments; (4) after reviewing 

the GSEs’ written comments, HUD 

would provide each GSE with an 

opportunity to meet to discuss the effect 

of the proposed public release; (5) after 

the meeting, HUD may request 

additional information or make a 

determination; and (6) if HUD decides 

to make the data elements or aggregated 

data non-proprietary, it will provide 

notice to the GSEs of its determination 

and state that the Secretary will not 

release the data for 10 working days. 

HUD Determination. HUD has 

considered the GSEs’ comments and is 

persuaded by some of these comments 

and, as a result, has made several 

changes to § 81.75 at this final rule 

stage. However, HUD is not persuaded 

by other GSE comments and, as a result, 

has not incorporated these suggested 

changes in this final rule. A discussion 

of each of HUD’s determinations 

follows. 

In response to the GSEs’ expressed 

concerns that the procedures in existing 

§ 81.74(f)(1) and (2) are inappropriate 

when HUD, rather than a GSE, initiates 

the proprietary determination process, 

HUD has determined that it would be 

simpler and more straightforward to 

incorporate the applicable procedures 

into § 81.75. These are the procedures 

the Secretary will use whenever he or 

she proposes to issue an order 

authorizing the release of reclassified 

mortgage data or AHAR information, or 

aggregations of data derived from 

proprietary loan-level mortgage data. As 

a result of this change, HUD has 

eliminated its proposed cross-references 

in § 81.75(b)(1) and (c) to the regulatory 

procedures in § 81.74(f)(1) and (f)(2), 

and has instead established the 

applicable procedures in a new 

§ 81.75(d). 

A review of § 81.75(d) reveals that it 

largely incorporates the procedures that 

currently exist in § 81.74(f)(1) and (f)(2). 

However, HUD has made changes to 

some of those procedures as a result of 

its consideration of the GSEs’ comments 

on the proposed rule. 

Specifically, HUD has adopted in 

§ 81.75(d)(1) Fannie Mae’s 

recommendation to notify the GSEs in 

writing of the actual data element(s), 

AHAR information, and/or aggregated 

data that are under consideration for 

release to the public. 

HUD has not, however, adopted 

Fannie Mae’s suggestion that the written 

notice include the basis for HUD’s 

proposed reclassification of the data 

elements since any reclassification that 

HUD undertakes must be based upon 

the Secretary’s consideration of all of 

the regulatory factors in § 81.74(b). 

In addition, HUD has not adopted 

Fannie Mae’s suggestion that the written 

notice include HUD’s assessment of the 

data proposed to be reclassified under 

each of the regulatory factors in 

§ 81.74(b). HUD does not prepare this 

assessment until it has completed any 

fact-finding that it considers to be 

necessary in connection with a 

proposed reclassification of mortgage 

data. (For example, HUD would want to 

have the benefit of the GSEs’

perspectives and input with respect to 

any proposed release of its mortgage 

data or AHAR information before HUD 

develops its assessment of the relevant 

mortgage data elements or AHAR 

information under the regulatory factors 

in § 81.74(b).) 

HUD also has determined not to adopt 

Fannie Mae’s recommendation that the 

rule provide the GSEs with a minimum 

of 30 days in which to submit written 

comments. HUD believes that a 30-day 

minimum period may not be an 

appropriate period of time, in every 

instance, for the submission of written 

comments in connection with a 

proposed reclassification of mortgage 

data or AHAR information. As a result, 

HUD believes that it is appropriate for 

it to retain the discretion to determine, 

on a case-by-case basis, what constitutes 

a reasonable period of time by which 

the GSEs must submit their written 

comments. 

HUD’s current regulations at 24 CFR 

81.74(f)(1) state that the Secretary, in 

considering a GSE’s proprietary request, 

‘‘shall provide the GSE with an 

opportunity for a meeting with HUD to 

discuss the matter for the purpose of 

gaining additional information 

concerning the request.’’ Because HUD 

is providing the GSEs in § 81.75(d)(1) 

with the opportunity to submit written 

comments in connection with any 

proposed release of GSE mortgage data, 

AHAR information or aggregated data, 

HUD does not believe that it is 

necessary to require, in each instance, 

that HUD also offer to hold a meeting 

with the GSEs before making its 

determination. While such a meeting 

may be necessary when a GSE initiates 

the request for proprietary 

determination so that the Secretary can 

gain ‘‘additional information concerning 

the request,’’ HUD believes that it may 

not always be necessary where the 

Secretary has initiated a proposed 

release of mortgage data, AHAR 

information, or aggregated data. 

Accordingly, § 81.75(d)(1) provides 

that the ‘‘Secretary may also provide 

each GSE with an opportunity for a 

meeting with HUD to discuss the 

proposed release of mortgage data, 

AHAR information or aggregated data.’’

(Emphasis added.) HUD believes that 

this discretionary authority to hold a 

meeting strikes a necessary and careful 

balance between HUD’s obligation to 

provide the GSEs with an opportunity to 

object to any proposed release of their 

mortgage data, AHAR information, or 

aggregated data (in this final rule, by the 

submission of written comments), while 

also streamlining the administrative 

process sufficiently that non-proprietary 

mortgage data, AHAR information, or 

aggregated data can be made available to 

the public in an efficient manner. To the 

extent that the Secretary determines that 

it would be helpful, before making a 

determination, to meet with the GSEs 

individually to discuss the proposed 

release of mortgage data, AHAR 

information, or aggregated data, he or 

she will arrange to do so. 

Section 81.75(d)(2) of this final rule 

provides that the Secretary shall make a 

determination regarding the proposed 

release of the GSEs’ mortgage data, 

AHAR information, or aggregated data 

based on a consideration of the data or 

information under the standards set 

forth in § 81.74(b) and the GSEs’ written 

and oral objections, if any, to the 

proposed release of the mortgage data, 

AHAR information, or aggregated data. 

This language is consistent with the 

current requirements in §§ 81.74(b) and 

81.74(f)(2), except that HUD has now 

added a requirement that the Secretary 

must consider, in making his or her 

determination, the GSEs’ written 

comments objecting to the proposed 

release of the mortgage data, AHAR 

information, or aggregated data. If the 

Secretary, or his or her designee, has 

also met with the GSEs about the 

proposed release of mortgage data, 

AHAR information, or aggregated data, 

the Secretary also is required by 

§ 81.75(d)(2) to consider the GSEs’ oral 

objections, if any. 

New § 81.75(d)(3) states that the 

Secretary shall provide notice in writing 

to each GSE of the Secretary’s 

determination and the reasons under 

§ 81.74(b) for his or her determination. 

In addition, consistent with HUD’s 

Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 69025 

existing regulations at § 81.74(f)(2)(ii) 

and Fannie Mae’s own request, new 

§ 81.75(d)(3) states that whenever the 

Secretary determines that GSE mortgage 

data, AHAR information, or aggregated 

data may be released, the written notice 

must also provide that the Secretary will 

not release the mortgage data, AHAR 

information, or aggregated data to the 

public for 10 working days. 

New § 81.75(d)(4) states that the 

Secretary shall, no earlier than the end 

of the 10 working day period, publish 

an order in the Federal Register 

notifying the public of the Secretary’s 

determination to release the reclassified 

mortgage data or AHAR information 

and/or to release certain non-proprietary 

aggregations of data derived from 

proprietary loan-level mortgage data. 

The order will also modify the list of 

proprietary determinations to reflect the 

Secretary’s reclassification of the 

mortgage data or AHAR information. 

This procedure is consistent with 

existing § 81.75, which states that the 

Secretary ‘‘may modify the list [of HUD 

proprietary determinations] by 

regulation or order.’’ Section 81.75(d)(4) 

also states that the Secretary shall omit 

from the published order any 

information that would reveal 

proprietary information. This language 

is consistent with existing 

§ 81.74(e)(1)(ii), which requires that the 

Secretary exclude from public 

disclosure any portion of an order or 

regulation that would reveal proprietary 

information. 

HUD believes that the changes 

described above will go far in clarifying 

the procedures the Secretary will use in 

considering reclassifications of GSE 

mortgage data and AHAR information 

and the release of certain aggregated 

data derived from proprietary loan-level 

mortgage data. While these procedures 

largely incorporate existing 

requirements established by HUD in 

§ 81.74(f)(1) and (2), they also reflect 

changes that HUD believes to be 

appropriate in light of its dual statutory 

obligations to ensure that proprietary 

mortgage data or AHAR information are 

not released to the public, while also 

providing the public with the GSEs’

non-proprietary mortgage data or AHAR 

information. As discussed above, these 

changes were made by HUD either in 

response to the GSEs’ comments, or as 

an outgrowth of HUD’s consideration of 

the GSEs’ comments. 

Comment: Rule fails to provide third 

parties with due process. Fannie Mae 

noted that HUD, in promulgating this 

rule, must balance the public’s desire 

for data against important objectives of 

protecting property rights and consumer 

privacy. Fannie Mae asserted that even 

though HUD’s regulations require the 

Secretary to protect the confidentiality 

of information the release of which 

would ‘‘constitute a clearly unwarranted 

invasion of personal privacy,’’ they do 

not provide guidance on how HUD 

would represent the interests of third 

parties whose privacy might be affected 

by the determination. (See 24 CFR 

81.72(b)(3).) In particular, Fannie Mae 

expressed concern that the Secretary’s 

release of historical data for the years 

1993–2003 in connection with the 

mortgage data elements that were 

reclassified as non-proprietary in the 

2004 Final Order (‘‘1993–2003 

Historical Data’’) could allow the 

creation of borrower profiles with 

personally identifiable information that 

could be used irresponsibly by 

predatory lenders. 

Fannie Mae and Freddie Mac both 

asserted that the procedures in the 2005 

Proposed Rule were defective because 

they do not require HUD to provide 

notice to, and consider written 

comments from, ‘‘all affected parties’’

before the Secretary makes a 

reclassification determination. 

Freddie Mac asked HUD to consider 

whether the process for reclassifying 

information should generally be done by 

a rulemaking or, in the alternative, to 

identify the circumstances under which 

a rulemaking may be more appropriate 

for reclassifying information than 

through an order. ACB expressed 

similar views, urging HUD to proceed 

by public rulemaking whenever a 

pending determination could impact the 

availability of loan-level information 

about specific lenders’ business, either 

directly or through cross-reference to 

any available third-party data. ACB, 

Fannie Mae, and Freddie Mac each 

asked HUD to give all affected parties 

the right to comment on whether a 

rulemaking would be more appropriate 

in light of the public interest in the 

proposed disclosures. 

HUD Determination. HUD has 

considered the public comments and 

determined that no additional 

protections are required in this final 

rule to protect the privacy rights of third 

parties. As Fannie Mae has correctly 

noted, HUD’s existing regulations 

already require the Secretary to ensure 

that data or information submitted by, 

or relating to, the GSEs that would 

constitute a ‘‘clearly unwarranted 

invasion of personal privacy’’ are not 

disclosed to the public. (See 24 CFR 

81.71(e) and 81.72(b)(3).) HUD already 

has regulatory standards in place at 24 

CFR 81.74(b) that enable the Secretary 

to protect the privacy rights of third 

parties. (See, for example,§ 81.74(b)(4), 

which requires the Secretary to consider 

‘‘[t]he extent to which the mortgage data 

or AHAR information is publicly 

available including whether the data or 

information is available from other 

entities, from local government offices 

or records, including deeds, recorded 

mortgages, and similar documents, or 

from publicly available databases.’’) 

HUD believes that these existing 

standards are sufficient to permit the 

Secretary to guide its proprietary 

determinations and ensure that the 

privacy rights of third parties are not 

violated. 

For this same reason, HUD does not 

agree that the procedures described in 

the 2005 Proposed Rule are ‘‘defective’’

because they do not require HUD to 

provide notice to, and consider written 

comments from, ‘‘all affected parties’’

before the Secretary makes a 

reclassification determination. 

HUD also does not believe it is 

necessary or appropriate to restrict the 

circumstances under which HUD may 

undertake a reclassification 

determination by order rather than 

regulation. HUD is authorized by 

section 1326 of FHEFSSA to make 

proprietary determinations ‘‘by 

regulation or order,’’ and HUD’s existing 

regulations at 24 CFR 81.75 also 

authorize the Secretary to modify a prior 

proprietary determination by regulation 

or order. In light of HUD’s statutory 

obligation under FHEFSSA to ensure 

that the GSEs’ non-proprietary mortgage 

data and AHAR information are made 

available to the public, and the 

regulatory standards that already exist 

to protect the interests of third parties, 

HUD does not believe that the public 

interest would be served by curtailing 

its authority to undertake a 

reclassification determination by order. 

Comment: Rule should be amended to 

include additional regulatory factors. 

Fannie Mae urged HUD to amend its 

regulations to include a consideration of 

the following two factors in connection 

with proprietary determinations: (1) The 

extent to which data released by HUD 

can be used singularly, or in 

conjunction with other information in 

the public domain, to ascertain 

confidential, private, or personal 

information about consumers, the GSEs’

business partners, real estate assets, 

and/or residents of properties financed 

by mortgages purchased by the GSEs; 

and (2) the extent to which data may 

assist in the planning and perpetration 

of terrorist acts, fraud, and/or other 

malicious acts against real estate 

properties, individuals, business 

entities, or communities. 

With regard to its second proposed 

factor, Fannie Mae cited a Department 

of Homeland Security warning about 

69026 Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 

9Citing remarks by former Secretary Tom Ridge, 

former Attorney General John Ashcroft, and 

Director Robert Mueller, U.S. Department of 

Homeland Security, Office of the Press Secretary, 

February 7, 2003. 

10As discussed in Section I of this preamble, any 

such HUD reconsideration would be subject to the 

limitations of 24 CFR 81.72(c)(1), which prohibits 

the Secretary from publicly disclosing certain types 

of mortgage data and AHAR information, including 

mortgage data and AHAR information, the release 

of which would constitute a clearly unwarranted 

invasion of personal privacy, that are required to be 

withheld, or that the Secretary determines are not 

appropriate for public disclosure under other 

applicable laws and regulations. 

terrorist groups that might target 

‘‘apartment buildings, hotels and other 

soft or lightly secured targets in the 

United States.’’ 9 Fannie Mae contended 

that incorporating these factors into 

HUD’s regulations will help to ensure 

that any changes to proprietary 

treatment of loan-level or aggregated 

data involve a consideration of the 

interests of all parties, as well as other 

security interests that were not 

significant concerns at the time the 

original public use database regulations 

were developed. 

HUD Determination. After 

considering Fannie Mae’s 

recommendation, HUD has decided not 

to amend its regulations to add these 

two additional regulatory factors. With 

regard to Fannie Mae’s first 

recommendation, HUD believes that its 

existing regulations at § 81.74(b) already 

require the Secretary to consider the 

extent to which mortgage data or AHAR 

information are publicly available, 

including whether the data or 

information are available from other 

entities, from local government offices 

or records, or from publicly available 

databases (e.g., through the Home 

Mortgage Disclosure Act (HMDA) 

database or other public and/or private 

vendors). (See § 81.74(b)(4).) 

HUD considers Fannie Mae’s second 

recommendation to be unnecessary 

since anyone seeking information on 

properties from the HUD public use 

database would not be able to obtain 

information at the same level of detail 

that is already available in the public 

domain. For example, property street 

addresses are not available in the HUD 

public use database. 

In light of the Secretary’s clear 

statutory duty under FHEFSSA to 

release to the public GSE mortgage data 

and AHAR information that are not 

proprietary, and the comprehensive 

nature of the Secretary’s current 

assessment under HUD’s regulations at 

§ 81.74(b), HUD does not believe that 

the addition of these two new regulatory 

factors is necessary or warranted. 

Comment. Five-year aging period. 

Fannie Mae and Freddie Mac both 

objected strongly to the proposed fiveyear time period after which mortgage 

data might lose their proprietary 

character and, as a result, warrant a 

reconsideration of proprietary status 

under HUD’s regulations. Fannie Mae 

maintained that aged data continue to 

provide it with value, and that certain 

aged data are more valuable to 

competitors after several years than at 

the time of origination. Fannie Mae 

expressed particular concern about the 

five-year time period in connection with 

its multifamily business where loans 

typically have maturities ranging from 

nine to ten years. 

Freddie Mac affirmed that five years 

is a short period of time when 

considering long-term obligations like 

mortgages, and asserted that the release 

of five-year-old proprietary data still 

presents privacy concerns to consumers 

and potentially could still cause harm to 

Freddie Mac and its customers. 

In particular, Freddie Mac disputed 

HUD’s assertion in the 2005 Proposed 

Rule that significant portions of the GSE 

mortgage data that it had previously 

determined to be proprietary are now 

‘‘available publicly through private 

vendors.’’ Freddie Mac maintained that 

its data are different from other data that 

can be purchased from a data broker 

over the Internet because ‘‘borrowers 

provided this information to a mortgage 

lender under penalty of federal law’’

and, as a result, may be subject to civil 

liability or criminal penalties for 

intentional or negligent 

misrepresentation of application 

information. 

Freddie Mac also asserted that the 

Federal government’s decision to enact 

the Gramm-Leach-Bliley Act (15 U.S.C. 

6801, et seq., enacted November 12, 

1999) to regulate the use and disclosure 

of information provided to financial 

institutions, while choosing not to 

regulate other types of entities that may 

collect some of the same information, 

recognizes that financial institution 

information is ‘‘significantly more 

sensitive’’ than information available 

through other public sources. 

Both GSEs asserted that HUD’s 2005 

Proposed Rule establishes a 

‘‘presumption’’ that data lose their 

proprietary character after only five 

years, and each vigorously disputed the 

validity of such a presumption. Freddie 

Mac urged HUD to abolish such a 

‘‘presumption’’ and to review all six of 

the regulatory factors in 24 CFR 81.74(b) 

before deciding whether to proceed with 

a reclassification of proprietary 

information. 

Freddie Mac also asserted that other 

proprietary data collected by the 

government have no ‘‘time-release 

provisions’’ or have much lengthier 

‘‘time release provisions.’’ Freddie Mac 

stated that HMDA has no ‘‘time-release 

provision’’ or ‘‘presumption,’’ and that 

the U.S. Census of Population and 

Housing does not publicly release 

individual-level data for 72 years. In 

addition, Freddie Mac noted that, under 

the Freedom of Information Act (FOIA), 

5 U.S.C. 552(b)(3), the ‘‘time release’’ or 

‘‘default presumption’’ under which 

information can become public after a 

submitter has requested confidentiality 

is 10 years. 

However, NAHB commented that the 

‘‘five year aging requirement’’ in 

proposed § 81.75(b)(3) establishes a 

satisfactory method of respecting the 

privacy expectations associated with 

relevant mortgage data elements, and 

noted specifically that five years is ‘‘a 

significant amount of time.’’

HUD Determination. HUD has 

decided to retain the minimum five-year 

aging period for reclassifications of 

mortgage data because of the passage of 

time, but has decided to make three 

clarifying changes to its regulations in 

response to the public comments it 

received. 

HUD believes that the five-year period 

is a reasonable minimum period of time 

after which mortgage data might lose 

their proprietary character and, as a 

result, warrant a reconsideration of 

proprietary status under HUD’s 

regulations. However, as stated in the 

2005 Proposed Rule, the five-year 

period is a minimum aging requirement 

that applies to reclassifications based on 

the age of the mortgage data. The 

Secretary will determine the actual time 

intervals for reconsideration of the 

proprietary status of particular mortgage 

data elements on a case-by-case basis.10

(See HUD’s discussion of this issue at 70 

FR 1775 of the 2005 Proposed Rule.) 

This case-by-case assessment of 

particular mortgage data elements 

contradicts the GSEs’ contentions that 

the five-year minimum period 

establishes a ‘‘presumption’’ that data 

lose their proprietary character after 

only five years. Nevertheless, HUD has 

decided to clarify this point by revising 

the first sentence of § 81.75(b)(3) to 

state, ‘‘[t]he Secretary may determine, 

through case-by-case consideration of 

individual data elements under 

paragraph (b)(1) of this section, that 

certain mortgage data previously 

determined to be proprietary may lose 

their proprietary status if they are at 

least five years old * * *’’ (Emphasis 

added.) 

With regard to Freddie Mac’s 

assertion that HUD should abolish the 

five-year ‘‘presumption’’ and review all 

Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 69027 

six of the regulatory factors in 24 CFR 

81.74(b) before deciding whether to 

proceed with a reclassification of 

proprietary information, HUD reiterates 

that this is precisely what HUD intends 

to do. HUD attempted to make this point 

when it stated in the 2005 Proposed 

Rule that the ‘‘Secretary would make his 

or her determination [regarding the reclassification of aged data] based upon 

a consideration of the regulatory factors 

in § 81.74(b).’’ (Emphasis added.) (See 

70 FR 1777.) In this final rule, HUD has 

made two changes to further clarify this 

point. 

First, HUD has included a sentence in 

§ 81.75(b)(3) which states, ‘‘[t]he 

Secretary will evaluate the age of the 

data as one of the relevant factors that 

may be considered under 24 CFR 

81.74(b)(6).’’ (Emphasis added.) 

Second, HUD has amended the 

regulatory factors that the Secretary 

considers when determining the 

proprietary status of mortgage data 

under § 81.74(b)(6) to specifically 

include a reference to the age of the 

mortgage data. This second amendment 

is intended to further clarify that the 

Secretary’s consideration of the age of 

mortgage data under § 81.75(b)(3) is just 

one of the regulatory factors that must 

be evaluated. 

While Freddie Mac may contend that 

its data are qualitatively superior to 

mortgage data that can be purchased 

from a data broker over the Internet 

because ‘‘borrowers provided this 

information to a mortgage lender under 

penalty of federal law,’’ this reasoning 

would presumably support treating all 

GSE mortgage data as proprietary and 

preclude HUD from releasing any such 

data to the public. Such an outcome 

would be clearly untenable and 

inconsistent with HUD’s statutory 

obligation under FHEFSSA to disclose 

the GSEs’ non-proprietary mortgage data 

to the public. 

With regard to Freddie Mac’s 

assertion that the Gramm-Leach-Bliley 

Act constitutes implicit federal 

recognition that financial institution 

information is ‘‘significantly more 

sensitive’’ than information available 

through other public sources, HUD 

notes that Congress has enacted a very 

specific statutory regime in section 1323 

of FHEFSSA that requires the Secretary 

to disclose to the public the GSEs’ nonproprietary mortgage data. Since the 

GSEs derive their mortgage data from 

the financial institutions/mortgage 

sellers from whom they purchase the 

mortgages, the enactment of section 

1323 of FHEFSSA reflects the clear 

intent of Congress to ensure and 

regulate the public disclosure of nonproprietary financial institution 

information provided by mortgage 

sellers to the GSEs. 

With regard to Freddie Mac’s 

comment that other proprietary data 

collected by the government have no 

‘‘time-release provisions,’’ or have much 

lengthier ‘‘time release provisions,’’

HUD is uncertain as to the meaning that 

Freddie Mac is imputing to the term 

‘‘time-release provision.’’ If Freddie Mac 

means that GSE mortgage data 

previously determined by HUD to be 

proprietary will be reclassified as nonproprietary automatically after five 

years under § 81.75(b)(3), then this 

interpretation is mistaken and neither 

the 2005 Proposed Rule nor this final 

rule contain a ‘‘time release provision.’’

While HUD’s consideration of the 

regulatory factors in § 81.74(b) could 

potentially result in the release of 

certain GSE mortgage data after five 

years, the Secretary may well determine 

that other mortgage data should be kept 

confidential for 10, 20, or even 50 years. 

Moreover, regardless of HUD’s 

determination under § 81.75(b)(3) with 

respect to any particular mortgage data 

element, HUD will not implement its 

determination until it has completed an 

analysis of the mortgage data under the 

six regulatory factors in § 81.74(b) and 

fully complied with the due process 

procedures described in this final rule. 

HUD believes that its re-evaluation of 

GSE proprietary mortgage data to ensure 

that these data continue to qualify as 

proprietary is fully consistent with the 

Secretary’s affirmative duty and 

obligation under section 1323 of 

FHEFSSA to ‘‘make available to the 

public * * *’’ the data submitted by 

[the GSEs under their charter acts],’’

except for mortgage data that are 

proprietary. 

HUD reiterates, as it previously noted 

in the 2005 Proposed Rule, that the 

addition of § 81.75(b)(3) to govern the 

release of certain mortgage data that 

have aged a minimum of five years does 

not limit HUD’s current ability under 

§ 81.75 to seek, at any time, to reclassify 

GSE mortgage data from proprietary to 

non-proprietary status. This is because 

§ 81.75(b)(3), as added by this final rule, 

deals only with the reclassification and 

release of aged GSE mortgage data. This 

provision is independent of, and does 

not remove or limit, HUD’s existing 

authority under § 81.75 (§ 81.75(b)(1) of 

this final rule) to modify a prior 

proprietary determination by 

reclassifying GSE mortgage data as nonproprietary. (See HUD’s prior discussion 

of this matter in the 2005 Proposed Rule 

at 70 FR 1774, 1778.) 

(For a discussion of how HUD’s 

release of GSE mortgage data under 

§ 81.75(b)(3) compares with the release 

of GSE mortgage data under HUD’s 

regulations implementing Exemption 4 

of FOIA at 24 CFR 15.108(b)(1), see the 

2005 Proposed Rule at 70 FR 1777.) 

Comment. Release of historical data 

constitutes retroactive rulemaking. 

Fannie Mae claimed that the proposed 

rule constitutes a ‘‘retroactive 

rulemaking’’ with respect to each of the 

three circumstances in which it would 

allow for the public release of the GSEs’

historical data that has previously been 

determined by HUD to be proprietary. 

Fannie Mae described these three 

categories as: (1) The release of GSE data 

that have already been determined to be 

proprietary, upon HUD’s determination 

that the data field in question will no 

longer be afforded proprietary status; (2) 

proprietary data that are at least five 

years old; and (3) aggregated data 

derived from historical proprietary loanlevel data that would be released upon 

HUD’s determination that the data is not 

proprietary in aggregated form. 

Fannie Mae stated further that, absent 

explicit authorization by Congress, no 

government agency has statutory 

authority to issue regulations that have 

a ‘‘retroactive effect’’ and that Congress 

did not grant HUD explicit authority to 

promulgate such rules when it enacted 

FHEFSSA. In addition, Fannie Mae 

claimed that the courts, in determining 

whether a measure has retroactive 

effect, consider ‘‘whether it would 

impair rights a party possessed when he 

acted, increase a party’s liability for past 

conduct, or impose new duties with 

respect to transactions already 

completed.’’ (Citing Georgetown 

Hospital v. DirectTV, Inc. v. Federal 

Communications Commission, 110 F.3d 

816, 825–826 (D.C. Cir. 1997).) Fannie 

Mae maintained that, based upon a 

consideration of these factors, the 2005 

Proposed Rule would, when 

implemented, have a retroactive effect 

because the GSEs submit their 

proprietary data to HUD with the 

‘‘reasonable expectation that the data 

will remain proprietary indefinitely,’’

and that HUD’s release of this data will 

place the GSEs at a competitive 

disadvantage in the market and impair 

their property rights in their historical 

mortgage data. 

HUD Determination. HUD has 

considered Fannie Mae’s comments 

and, for the reasons discussed below, 

disagrees that the current rulemaking 

has a ‘‘retroactive effect.’’

Initially, HUD notes that the GSEs, as 

federally chartered corporations, submit 

their mortgage data to HUD because of 

a statutory obligation imposed upon 

them by their charter acts. (See section 

309(m) of the Fannie Mae Charter Act, 

12 U.S.C. 1723a(m), and section 307(e) 

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

11See S. Rep. No. 102–282, 102nd Cong., 2d Sess. 

40 (1992). 

12See S. Rep. No. 102–282, 102nd Cong., 2d Sess. 

40 (1992). 

of the Freddie Mac Act, 12 U.S.C. 

1456(e).) HUD, as the GSEs’ housing 

mission regulator, has a statutory 

obligation under section 1323 of 

FHEFSSA to release the GSEs’ nonproprietary mortgage data and AHAR 

information to the public. The 

legislative history of FHEFSSA 

expressly provides that ‘‘* * * every 

effort should be made to provide public 

disclosure of the information required to 

be collected and/or reported to the 

regulator [HUD] consistent with the 

exemption for proprietary data.’’ 11 The 

GSEs have been aware of these parallel 

statutory obligations as they have 

continued to submit their mortgage data 

to HUD over the years. 

Moreover, since 1995 when HUD first 

promulgated regulations establishing 

requirements governing the GSEs (60 FR 

61888, December 1, 1995), HUD’s public 

use database regulations at 24 CFR 81.75 

have expressly stated that ‘‘[t]he 

Secretary may modify the list [of HUD 

proprietary determinations] by 

regulation or order.’’ HUD has also 

stated, in each of the proprietary 

determination orders that it has issued 

since 1995, that the order will remain 

effective until such time as it is 

determined necessary or appropriate to 

withdraw or modify it. 

In light of the above express statutory 

and regulatory framework, and the 

notice provided to the GSEs in each of 

HUD’s prior orders that the proprietary 

determinations could be withdrawn or 

modified ‘‘as * * *’’ determined 

necessary or appropriate,’’ HUD cannot 

agree with Fannie Mae that the GSEs 

have submitted their mortgage data to 

HUD with a ‘‘reasonable expectation’’

that the data previously determined by 

HUD to be proprietary will remain 

proprietary indefinitely. 

There is no question that the GSEs 

have a legitimate property right in 

mortgage data that qualify, in fact, as 

proprietary information, and that HUD 

is statutorily required by section 1326 of 

FHEFSSA to ensure that such data are 

not released to the public. However, the 

GSEs do not have a permanent and 

incontrovertible property right in 

mortgage data simply because HUD, at 

a prior point in time, made a 

determination that such data are 

proprietary. 

As previously noted, the GSEs submit 

their mortgage data to HUD because 

they are statutorily obligated to do so 

and they, in turn, have received 

numerous benefits as a result of their 

federally chartered status as GSEs. The 

GSEs have also been on notice—by 

virtue of HUD’s statutory obligations in 

section 1323 of FHEFSSA, HUD’s 

regulatory authority in 24 CFR 81.75 to 

amend prior proprietary determinations, 

and the conditional nature of HUD’s 

prior orders—that HUD’s proprietary 

determinations are conditional in nature 

and may be modified and superseded. 

The GSEs are entitled to due process 

before HUD can modify any prior 

proprietary determination, and this final 

rule ensures that the GSEs are provided 

with both notice and an opportunity to 

comment on any proposed 

reclassification of mortgage data or 

AHAR information. In addition, the 

GSEs have the right to receive HUD’s 

written analysis of any proposed 

reclassification of mortgage data 

element(s) or AHAR information under 

the regulatory factors in 24 CFR 

81.74(b), and to seek judicial recourse 

during a ten-working-day period before 

HUD will release the mortgage data or 

AHAR information to the public. (See 

the discussion of procedural safeguards 

governing the release of GSE historical 

mortgage data later in this preamble.) 

HUD believes that these procedural 

safeguards provide a reasoned and 

balanced approach that will enable it to 

carry out its twin statutory 

responsibilities of making ‘‘* * * every 

effort * * * to provide public 

disclosure of the information required to 

be collected and/or reported to [HUD] 

consistent with the exemption for 

proprietary data.’’ 12

Comment: GSE historical data 

continue to be legally protected from 

disclosure; Discussion of applicable 

procedures. Fannie Mae objected to 

HUD’s statement in the proposed rule 

that it intended to release historical 

‘‘GSE mortgage data that HUD has 

determined to be non-proprietary for the 

years 1993 through 2003, including GSE 

mortgage data that HUD has determined 

in the 2004 Final Order to be nonproprietary.’’ (See 70 FR 1777.) In 

addition to Fannie Mae’s assertion that 

HUD’s release of this historical data 

constitutes ‘‘retroactive rulemaking’’

(see HUD’s determination in response to 

this comment, above), Fannie Mae 

raised a number of other arguments in 

support of why it believes HUD’s release 

of this historical data would be 

unlawful. 

Initially, Fannie Mae asserted that 

FHEFSSA, HUD’s regulations, FOIA, 

and the Trade Secrets Act, 18 U.S.C. 

1905, all compel HUD to continue to 

protect data subject to an order 

determining such data to be proprietary. 

More specifically, Fannie Mae noted 

that section 1323(b)(1) of FHEFSSA 

prohibits the Secretary from releasing to 

the public data that the Secretary has 

determined to be proprietary. Since all 

of the historical data that HUD advised, 

in the 2005 Proposed Rule, would be 

released following the effective date of 

this final rule has already been 

determined by the Secretary to be 

proprietary, Fannie Mae asserted that 

HUD’s release of this historical data 

would violate FHEFSSA. 

Fannie Mae also maintained that 

HUD’s release of this historical data 

would violate HUD’s regulations. The 

GSE noted that 24 CFR 81.74(b) requires 

HUD to apply six factors when making 

a determination of whether to accord 

proprietary treatment to mortgage data 

or AHAR information, ‘‘[e]xcept as 

provided in paragraph [81.74](c) 

* * *.’’ (Emphasis added.) Fannie Mae 

asserted that the exception carved out in 

§ 81.74(c) means that the Secretary must 

grant a request for proprietary treatment 

where ‘‘the request for proprietary 

treatment pertains to mortgage data or 

AHAR information that has been 

deemed proprietary by the Secretary 

under a temporary order, final order, or 

regulation in effect * * *.’’ Fannie Mae 

claimed that since all of the historical 

data that HUD stated it would release 

following the effective date of this final 

rule are subject to an effective final 

order finding the data to be proprietary, 

the Secretary does not have the 

authority to apply the new provisions of 

§ 81.75(b) and (c) to this historical data 

as the proposed rule appears to 

contemplate. 

Fannie Mae also claimed that FOIA 

and HUD’s implementing regulations 

protect from disclosure data that HUD 

has determined to be proprietary. 

Fannie Mae asserted that matters 

‘‘specifically exempted from disclosure 

by statute’’ may not be released where 

the statute: ‘‘(A) requires that the 

matters be withheld from the public in 

such a manner as to leave no discretion 

on the issue; or (B) establishes particular 

criteria for withholding or refers to 

particular types of matters to be 

withheld.’’ Fannie Mae maintained that 

FHEFSSA satisfies both prongs of this 

FOIA test since it protects historical 

data that have been designated 

proprietary by HUD, and since 

FHEFSSA also prohibits the Secretary 

from releasing proprietary data. 

Fannie Mae also asserted that the 

historical mortgage data that HUD 

would release are protected by the 

Trade Secrets Act, which prohibits the 

unauthorized disclosure of a wide range 

of information by Federal officials, 

including confidential commercial or 

Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 69029 

financial information, statistical 

information, and information that 

would disclose the amount or source of 

income, profits, or losses. Fannie Mae 

stated that the Trade Secrets Act 

restricts ‘‘formal agency action’’ and 

applies even to actions approved by an 

agency head. Fannie Mae maintained 

that application of the procedures in the 

2005 Proposed Rule, as currently 

drafted, and HUD’s release of its 

historical mortgage data, could 

constitute a violation of the Trade 

Secrets Act because the data to be 

released ‘‘are of the type’’ covered by 

the Trade Secrets Act and have already 

been deemed proprietary under HUD’s 

statutory mandate and effective 

regulations. 

Fannie Mae further stated that HUD 

failed to include in the 2005 Proposed 

Rule a ‘‘reconsideration’’ of the factors 

in 24 CFR 81.74(b) that HUD is required 

to consider before it can determine that 

the 1993–2003 historical data are no 

longer proprietary. For this reason, 

Fannie Mae asserted that HUD has no 

authority to release this historical data 

to the public after the effective date of 

this final rule. 

HUD Determination. After a thorough 

consideration of each of Fannie Mae’s 

comments, HUD has concluded that it 

has the legal authority to release the 

GSEs’ historical mortgage data in 

accordance with the procedures set 

forth in this final rule. HUD’s reasoning, 

and its response to each of Fannie Mae’s 

comments, is set out below. 

With regard to Fannie Mae’s comment 

that section 1323(b)(1) of FHEFSSA 

prohibits the Secretary from releasing to 

the public data that the Secretary has 

determined to be proprietary, HUD 

notes that section 1326 of FHEFSSA 

broadly confers on the Secretary the 

authority to determine, through either 

regulation or order, ‘‘that certain 

information shall be treated as 

proprietary information and not subject 

to disclosure under section 1323.’’

Inherent in this authority is the 

Secretary’s authority to reconsider and 

modify a prior determination that 

information is proprietary. This 

inherent authority is expressed in 

HUD’s existing regulations at 24 CFR 

81.75, which authorize HUD to make a 

determination that mortgage data or 

AHAR information are proprietary 

under FHEFSSA and to issue a list 

providing that certain information shall 

be treated as proprietary information, 

but also expressly authorizing the 

Secretary to ‘‘modify the list by 

regulation or order.’’ Consequently, 

FHEFSSA does not act as a statutory bar 

to prohibit HUD’s release of GSE 

mortgage data that HUD has properly 

reclassified as non-proprietary, but only 

prohibits HUD’s release of the GSEs’

proprietary data. 

As noted, Fannie Mae also asserts that 

HUD’s release of the 1993–2003 

historical data pertaining to the 

mortgage data elements that were 

granted proprietary status under HUD’s 

1996 final order (the 1996 Final Order) 

would violate 24 CFR 81.74(c). This 

HUD regulatory provision states that 

‘‘[w]here the request for proprietary 

treatment pertains to mortgage data or 

AHAR information that has been 

deemed proprietary by the Secretary 

under a temporary order, final order, or 

regulation in effect, the Secretary shall 

grant the request with respect to any 

mortgage data or AHAR information 

which comes within the order or 

regulation.’’ (Emphasis added.) Fannie 

Mae maintains that since all of the 

historical data are subject to an effective 

final order finding the data to be 

proprietary, the Secretary does not have 

the authority to apply the new 

provisions of § 81.75(b) and (c) to this 

historical data as the proposed rule 

appears to contemplate. 

HUD does not agree with Fannie 

Mae’s interpretation of 24 CFR 81.74(c). 

This provision essentially means that 

the Secretary must honor any GSE 

request for proprietary treatment with 

respect to mortgage data or AHAR 

information that have been determined 

by the Secretary to be proprietary under 

an order or regulation ‘‘in effect.’’ HUD’s 

1996 Final Order granted proprietary 

status to the mortgage data elements that 

HUD subsequently reclassified as nonproprietary in its 2004 Final Order. 

However, the 2004 Final Order was 

limited, by its terms, to the prospective 

release of these mortgage data elements. 

HUD intends, following the publication 

of this final rule, to initiate proceedings 

under § 81.75(b)(2) to reclassify as nonproprietary some or all of these 

mortgage data elements in prior years’

public use databases. These proceedings 

will be conducted in accordance with 

§ 81.75(d), which includes a 

requirement that the Secretary analyze 

each data element that is proposed to be 

reclassified under the regulatory factors 

in 81.74(b), and provide notice in 

writing to each GSE of his 

determination under these factors. In 

the event that the Secretary determines 

that some or all of these data elements 

no longer qualify as proprietary 

information, an order will be issued 

withdrawing and modifying the 1996 

Final Order, as expressly authorized by 

that Order. In such case, the 1996 Final 

Order would no longer be ‘‘in effect’’

with respect to the reclassified data 

elements and § 81.74(c) would not act as 

a regulatory bar on the Secretary’s 

authority to release some or all of the 

GSEs’ reclassified, non-proprietary 

historical mortgage data. 

HUD also does not agree with Fannie 

Mae that its historical mortgage data 

that are reclassified as non-proprietary 

are protected from disclosure by FOIA. 

For the reasons already discussed above, 

HUD does not believe that mortgage 

data elements that the Secretary has 

determined, by official agency action, to 

reclassify as non-proprietary will 

nevertheless retain into perpetuity their 

prior proprietary designation. Not only 

does such an interpretation contradict 

the clear legislative history to 

FHEFSSA, quoted earlier, which 

strongly supports HUD’s release to the 

public of the GSEs’ non-proprietary 

data, but it also contradicts a reasonable 

interpretation of HUD’s prior public use 

database orders. 

Moreover, HUD does not agree with 

Fannie Mae that its release of the GSEs’

historical mortgage data in accordance 

with the procedures described in this 

final rule would violate the Trade 

Secrets Act. The Trade Secrets Act 

provides, in part, that: 

Whoever, being an officer or employee of 

the United States or of any department or 

agency thereof * * * publishes, divulges, 

discloses, or makes known in any manner or 

to any extent not authorized by law any 

information coming to him in the course of 

his employment or official duties or by 

reason of any examination or investigation 

made by, or return, report or record made to 

or filed with, such department or agency or 

officer or employee thereof, which 

information concerns or relates to the trade 

secrets, processes, operations, style of work, 

or apparatus, or to the identity, confidential 

statistical data, amount or source of any 

income, profits, losses, or expenditures of 

any person, firm, partnership, corporation, or 

association * * * shall be fined under this 

title, or imprisoned not more than one year, 

or both; and shall be removed from office or 

employment. (Emphasis added.) 

HUD notes initially that its regulations 

at 24 CFR 81.2 define the term 

‘‘[p]roprietary information’’ to mean ‘‘all 

mortgage data and all AHAR 

information that the GSEs submit to the 

Secretary in the AHARs that contain 

trade secrets or privileged or 

confidential, commercial, or financial 

information that, if released, would be 

likely to cause substantial competitive 

harm.’’ (Emphasis added.) Thus, when 

the Secretary conducts a regulatory 

analysis to determine whether GSE 

mortgage data or AHAR information are 

proprietary based on the criteria in 24 

CFR 81.74(b), he or she considers 

whether the data or information qualify 

as a trade secret, the release of which 

would be likely to cause substantial 

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

competitive harm. The Secretary will 

not reclassify as non-proprietary 

mortgage data or AHAR information that 

the Secretary determines qualify as a 

trade secret and which, if released, 

would be likely to cause substantial 

competitive harm because, by 

definition, such a trade secret qualifies 

under HUD’s regulations as ‘‘proprietary 

information.’’

Consequently, when the Secretary 

makes a determination, based on the 

standards in § 81.74(b) and the 

requirements of §§ 81.75(b)(2) and 

81.75(d), that particular GSE mortgage 

data elements do not qualify as 

proprietary information and, thus, may 

be released to the public, his or her 

subsequent disclosure of that 

information is not actionable under the 

Trade Secrets Act because it is fully 

‘‘authorized by law.’’

III. Other Changes in This Final Rule 

HUD has also, at its own initiative, 

made three technical clarifications to 

§§ 81.75(b)(1), (b)(2), and 81.75(c) at this 

final rule stage. 

HUD’s existing regulations at § 81.75 

state that, following a determination by 

the Secretary that mortgage data or 

AHAR information are proprietary 

under FHEFSSA, the Secretary shall 

issue a temporary order, final order, or 

regulation withholding the mortgage 

data or AHAR information from the 

public-use database and from public 

disclosure by HUD. This provision goes 

on to state that the Secretary may, from 

time to time, by regulation or order, 

issue a list providing that certain 

information shall be treated as 

proprietary information. The regulation 

states that the Secretary ‘‘may modify 

the list by regulation or order.’’ In this 

final rule, HUD has clarified what is 

already implicit in the existing 

regulation, i.e., that any modification of 

the list by regulation or order follows 

the Secretary’s determination to modify, 

by regulation or order, a prior 

proprietary determination. 

Accordingly, HUD is providing in 

§ 81.75(b)(1) of this final rule that the 

Secretary may, based on a consideration 

of the factors in § 81.74(b), ‘‘modify a 

previous determination that mortgage 

data or AHAR information are 

proprietary information (and may also 

make conforming changes to the list 

designating certain mortgage data or 

AHAR information as proprietary 

information) by regulation or by order 

***’’ HUD does not intend by this 

clarification to expand the scope of its 

proposals in the 2005 Proposed Rule so 

that AHAR information also is subject to 

the provisions of §§ 81.75(b)(2) (release 

of prior years’ data), 81.75(b)(3) (release 

of aged data), and 81.75(c) (release of 

aggregated data). HUD’s 2005 Proposed 

Rule contemplated that these regulatory 

provisions would apply only to GSE 

mortgage data, and this same scope of 

coverage is retained in this final rule. 

While AHAR information is subject to 

modification of proprietary status under 

§ 81.75(b)(1), either by regulation or by 

order following the procedures in 

§ 81.75(d), this is consistent with HUD’s 

existing authority under 81.75, and does 

not expand upon that authority. 

HUD has also made a technical 

correction in § 81.75 of this final rule to 

reinstate a word that was omitted in the 

2005 Proposed Rule. Currently, § 81.75 

states that, following a determination by 

the Secretary that mortgage data or 

AHAR information is ‘‘proprietary 

information,’’ the Secretary shall issue 

an order or regulation withholding the 

data or information from public 

disclosure. Thereafter, this section states 

that the Secretary may issue a list 

providing that certain information shall 

be treated as ‘‘proprietary information.’’

In the 2005 Proposed Rule, the word 

‘‘information’’ was omitted in both of 

these regulatory references. Since the 

term ‘‘proprietary information’’ is a 

defined term in § 81.2, HUD has 

reinstated this term in 81.75(a), with 

conforming changes throughout this 

section. 

In the 2005 Proposed Rule, HUD 

indicated in § 81.75(b)(2) that, following 

a Secretarial determination to reclassify 

certain GSE mortgage data as nonproprietary, the Secretary would release 

the reclassified, non-proprietary 

mortgage data to the public both 

prospectively and for all years 

preceding the effective date of HUD’s 

determination, unless otherwise 

provided by the Secretary. Similarly, in 

§ 81.75(c) of the 2005 Proposed Rule, 

HUD stated that after the Secretary 

determined that certain aggregated data 

derived from proprietary loan-level 

mortgage data are not proprietary, the 

aggregated data would be released to the 

public both prospectively and for all 

years preceding the effective date of the 

Secretary’s determination. 

In this final rule, HUD has removed 

the phrase, ‘‘preceding the effective date 

of the Secretary’s determination’’ from 

both §§ 81.75(b)(2) and 81.75(c). Instead, 

HUD provides in § 81.75(b)(2) of this 

final rule that reclassified, nonproprietary mortgage data will be 

released to the public ‘‘both 

prospectively and for all prior years’

public use databases, unless otherwise 

provided by the Secretary.’’ (Emphasis 

added.) In addition, HUD states in 

§ 81.75(c) that non-proprietary 

aggregations of data derived from 

proprietary loan-level mortgage data 

will be released to the public ‘‘both 

prospectively and for all prior years, 

unless otherwise provided by the 

Secretary.’’ (Emphasis added.) 

HUD believes that these corrections 

are necessary to clarify that HUD’s nonproprietary determinations are 

‘‘effective’’ both with respect to prior 

years’’ data that it has previously 

classified as proprietary, as well as to 

future years’ data. HUD believes that the 

reference in the proposed rule to the 

‘‘effective date’’ of the Secretary’s 

determination could potentially confuse 

this point and, accordingly, HUD has 

made the clarifying changes described 

herein. These changes are fully 

consistent with HUD’s substantive 

proposals in the proposed rule to permit 

the release of prior years’ data following 

a Secretarial determination that the GSE 

mortgage data or AHAR information are 

not proprietary. 

IV. Findings and Certifications 

Executive Order 12866. The Office of 

Management and Budget (OMB) 

reviewed this final rule under Executive 

Order 12866, Regulatory Planning and 

Review, which the President issued on 

September 30, 1993. OMB determined 

that this rule is a ‘‘significant regulatory 

action’’ as defined in section 3(f) of the 

order (although not economically 

significant, as provided in section 3(f)(1) 

of the order). Any changes made to the 

final rule subsequent to its submission 

to OMB are identified in the docket file, 

which is available for public inspection 

between 8 a.m. and 5 p.m. weekdays in 

the Office of the Rules Docket Clerk, 

Office of General Counsel, Department 

of Housing and Urban Development, 

451 Seventh Street, SW., Room 10276, 

Washington, DC 20410–0500. 

Paperwork Reduction Act. HUD’s 

collection of information on the GSEs’

activities has been reviewed and 

authorized by OMB under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520), as implemented by 

OMB in regulations at 5 CFR part 1320. 

The OMB control number is 2502–0514. 

Environmental Impact. This final rule 

does not direct, provide for assistance or 

loan and mortgage insurance for, or 

otherwise govern or regulate, real 

property acquisition, disposition, 

leasing, rehabilitation, alteration, 

demolition, or new construction; or 

establish, revise, or provide for 

standards for construction or 

construction materials, manufactured 

housing, or occupancy. Accordingly, 

under 24 CFR 50.19(c)(1), this final rule 

is categorically excluded from 

environmental review under the 

Federal Register / Vol. 70, No. 217 / Thursday, November 10, 2005 / Rules and Regulations 69031 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321). 

Regulatory Flexibility Act. The 

undersigned, in accordance with the 

Regulatory Flexibility Act (5 U.S.C. 

605(b)), has reviewed this rule before 

publication and by approving it certifies 

that this rule would not have a 

significant economic impact on a 

substantial number of small entities. 

This final regulation is applicable only 

to the GSEs, which are not small entities 

for purposes of the Regulatory 

Flexibility Act, and, thus, does not have 

a significant economic impact on a 

substantial number of small entities. 

Executive Order 13132, Federalism. 

Executive Order 13132 (‘‘Federalism’’) 

prohibits, to the extent practicable and 

permitted by law, an agency from 

promulgating a regulation that has 

federalism implications and either 

imposes substantial direct compliance 

costs on state and local governments 

and is not required by statute, or 

preempts state law, unless the relevant 

requirements of section 6 of the 

Executive Order are met. This final rule 

does not have federalism implications 

and does not impose substantial direct 

compliance costs on state and local 

governments or preempt state law 

within the meaning of the Executive 

Order. 

Unfunded Mandates Reform Act. Title 

II of the Unfunded Mandates Reform 

Act of 1995 (12 U.S.C. 1531–1538) 

(UMRA) establishes requirements for 

federal agencies to assess the effects of 

their regulatory actions on state, local, 

and tribal governments, and the private 

sector. This final rule would not impose 

any federal mandates on any state, local, 

or tribal governments, or on the private 

sector, within the meaning of UMRA. 

List of Subjects in 24 CFR Part 81 

Accounting, Federal Reserve System, 

Mortgages, Reporting and recordkeeping 

requirements, Securities. 

■ Accordingly, 24 CFR part 81 is 

amended as follows: 

PART 81—THE SECRETARY OF HUD’S 

REGULATION OF THE FEDERAL 

NATIONAL MORTGAGE ASSOCIATION 

(FANNIE MAE) AND THE FEDERAL 

HOME LOAN MORTGAGE 

CORPORATION (FREDDIE MAC) 

■ 1. The authority citation for 24 CFR 

part 81 continues to read as follows: 

Authority: 12 U.S.C. 1451 et seq., 1716–

1723h, and 4501–4641; 42 U.S.C. 3535(d) and 

3601–3619. 

■ 2. Section 81.74 is amended by 

revising paragraph (b)(6) to read as 

follows: 

§ 81.74 Secretarial determination on GSE 

request. 

* * * * * 

(b) * * * 

(6) Such additional facts and legal and 

other authorities as the Secretary may 

consider appropriate, including the age 

of the mortgage data (see 24 CFR 

81.75(b)(3)), or the extent to which 

particular mortgage data or AHAR 

information, when considered together 

with other information, could reveal 

proprietary information. 

* * * * * 

■ 3. Section 81.75 is revised to read as 

follows: 

§ 81.75 Proprietary information withheld 

by order or regulation. 

(a) Secretarial determination of 

proprietary classification. Following a 

determination by the Secretary that 

mortgage data or AHAR information are 

proprietary information under 

FHEFSSA, the Secretary shall 

expeditiously issue a temporary order, 

final order, or regulation withholding 

the mortgage data or AHAR information 

from the public-use database and from 

public disclosure by HUD in accordance 

with 12 U.S.C. 4546. The Secretary may, 

from time to time, by regulation or 

order, issue a list providing that certain 

mortgage data or AHAR information 

shall be treated as proprietary 

information. 

(b) Modification of proprietary 

classification. (1) General. The Secretary 

may, based upon a consideration of the 

factors in § 81.74(b), modify a previous 

determination that mortgage data or 

AHAR information are proprietary 

information (and may also make 

conforming changes to the list 

designating certain mortgage data or 

AHAR information as proprietary 

information) by regulation, or by order 

using the procedures described in 

paragraph (d) of this section, as 

applicable. 

(2) Release of data following a 

modification of proprietary 

classification. Following the Secretary’s 

determination under paragraph (b)(1) of 

this section to modify a previous 

proprietary determination by 

reclassifying certain mortgage data as 

non-proprietary, the Secretary shall 

release the reclassified, non-proprietary 

mortgage data to the public both 

prospectively and for all prior years’

public use databases, unless otherwise 

provided by the Secretary. 

(3) Release of aged data. The 

Secretary may determine, through caseby-case consideration of individual data 

elements under paragraph (b)(1) of this 

section, that certain mortgage data 

previously determined to be proprietary 

may lose their proprietary status if they 

are at least five years old (as measured 

from the end of the calendar year to 

which the mortgage data pertain). The 

Secretary will evaluate the age of the 

data as one of the relevant factors that 

may be considered under 24 CFR 

81.74(b)(6). If the Secretary determines 

that such aged mortgage data have lost 

their proprietary status, these data shall 

be released publicly. 

(c) Release of aggregated data derived 

from proprietary loan-level data. The 

Secretary may, based upon a 

consideration of the factors in § 81.74(b) 

and using the procedures in paragraph 

(d) of this section, determine that 

certain aggregated data derived from 

proprietary loan-level mortgage data are 

not proprietary. If the Secretary makes 

such a determination, then the 

aggregated data shall be released to the 

public both prospectively and for all 

prior years, unless otherwise provided 

by the Secretary. 

(d) Procedures. The following 

procedures apply to the Secretary’s 

issuance of an order in connection with 

a determination under paragraph (b)(1) 

or (c) of this section: 

(1) The Secretary shall provide each 

GSE with written notice of the mortgage 

data, AHAR information or aggregated 

data proposed to be released, and an 

opportunity to submit written 

comments. The Secretary may also 

provide each GSE with an opportunity 

for a meeting with HUD to discuss the 

proposed release of mortgage data, 

AHAR information, or aggregated data; 

(2) The Secretary shall make a 

determination regarding the proposed 

release of the GSE mortgage data, AHAR 

information, or aggregated data based 

upon a consideration of the data or 

information under the standards set 

forth in 24 CFR 81.74(b) and the GSEs’

written and oral objections, if any, to the 

proposed release of such mortgage data, 

AHAR information, or aggregated data; 

(3) The Secretary shall provide notice 

in writing to each GSE of the Secretary’s 

determination and the reasons under 

§ 81.74(b) for his or her determination. 

If the Secretary determines that the 

mortgage data, AHAR information, or 

aggregated data may be released, the 

notice will also provide that the 

Secretary shall not release the mortgage 

data, AHAR information, or aggregated 

data to the public for 10 working days; 

(4) The Secretary shall, no earlier than 

the end of the ten-working-day period 

referred to in paragraph (d)(3) of this 

section, publish an order in the Federal 

Register notifying the public of the 

Secretary’s determination to release the 

mortgage data or AHAR information that 

has been reclassified as non-proprietary 

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

and/or to release certain non-proprietary 

aggregations of data derived from 

proprietary loan-level mortgage data. 

The order will also modify the list 

described in paragraph (a) of this 

section to reflect the Secretary’s 

reclassification of the mortgage data or 

AHAR information. The Secretary shall 

omit from the published order any 

information that would reveal 

proprietary information. 

Dated: October 17, 2005. 

Brian D. Montgomery, 

Assistant Secretary for Housing-Federal 

Housing Commissioner. 

[FR Doc. 05–22420 Filed 11–9–05; 8:45 am] 

BILLING CODE 4210–27–P