3170-0009 MAP (N) 2015 renewal SS -30day final

BUREAU OF CONSUMER FINANCIAL PROTECTION
PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST
SUPPORTING STATEMENT PART A
MORTGAGE ACTS AND PRACTICES
(REGULATION N) 12 CFR 1014
(OMB CONTROL NUMBER: 3170-0009)
OMB TERMS OF CLEARANCE:
Not applicable. The Office of Management and Budget (OMB) did not provide Terms of
Clearance when approved this information collection on July 25, 2012.
ABSTRACT:
Regulation N (12 CFR 1014), prohibits misrepresentations about the terms of mortgage credit
products in commercial communications and requires that covered persons keep certain related records
for a period of twenty-four (24) months from last dissemination. The information that Regulation N
requires covered persons to retain is necessary to ensure efficient and effective law enforcement to
address deceptive practices that occur in the mortgage advertising area.

A. JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The Omnibus Appropriations Act of 2009, as clarified by Section 511 of the Credit CARD Act
(123 STAT. 1737, Public Law 111-24), and as amended by Section 1097 of the Dodd-Frank Act (Pub. L.
111-203) directs the Bureau of Consumer Financial Protection (CFPB) to issue rules that “relate to unfair
or deceptive acts or practices” regarding mortgage loans. Regulation N (12 CFR 1014) implements the
terms of those statutes by prohibiting misrepresentations about the terms of mortgage credit products in
commercial communications and requires that covered persons (mortgage credit providers) keep certain
related records for a period of twenty-four (24) months from last dissemination. Specifically, Regulation
N requires covered persons to retain : (1) copies of all materially different commercial communications
disseminated, including but not limited to sales scripts, training materials, related marketing materials,
websites, and weblogs; (2) documents describing or evidencing all mortgage credit products available to
consumers during the time period in which each commercial communication was disseminated, including
but not limited to the names and terms of each such mortgage credit product available to consumers; and
(3) documents describing or evidencing all additional products or services (such as credit insurance or
credit disability insurance) that are or may be offered or provided with the mortgage credit products
available to consumers during the time period in which each commercial communication was

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disseminated, including but not limited to the names and terms of each such additional product or service
available to consumers. A failure to keep such records is a violation of Regulation N. 1
Historical record supports the conclusion that the information that Regulation N requires covered
persons to retain is necessary to ensure efficient and effective law enforcement to address deceptive
practices that occur in the mortgage advertising area. To gauge whether covered persons are complying
with Regulation N or making prohibited misrepresentations, it is necessary to review the commercial
communications that were disseminated and the information about the mortgage credit products and
relevant additional products or services available during the time period in which each commercial
communication was disseminated. Furthermore, a strong recordkeeping provision is necessary to foster
effective enforcement of Regulation N.
2. Use of the Information
The information that must be kept under Regulation N is may be used by the CFPB, the Federal
Trade Commission (FTC), and state regulatory agencies for enforcement purposes and to ensure
compliance by covered persons with Regulation N.
3. Use of Information Technology
The recordkeeping provision does not limit the use of available technology to maintain required
records. Regulation N allows covered persons to retain records in any legible form, and in the same
manner, format, or place as such records are kept in the ordinary course of business. Thus, Regulation N
is consistent with the aims of the Government Paperwork Elimination Act, 44 U.S.C. 3504 note.
4. Efforts to Identify Duplication
The recordkeeping provision in the Regulation N does not duplicate any other federal information
collection requirements. There are laws in all states that explicitly or implicitly require mortgage
advertisers to keep records of their advertisements, however, few of these state laws explicitly require
retention of the specific terms advertised to each consumer. The federal recordkeeping requirement does
require records of all different terms advertised. This distinction is only relevant for the relatively small
number of covered persons who engage in targeted advertising, but represents an important distinction
between state and federal recordkeeping requirements.
5. Efforts to Minimize Burdens on Small Entities
Regulation N attempts to minimize compliance burdens for all entities. Inasmuch as the
population of affected providers likely consists largely of small entities, exemptions based on size would
undermine the protective aims of Regulation N.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction

1

Regulation N, § 1014.5.

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Regulation N is tailored to minimize the frequency of recordkeeping as much as possible.
Historical record supports the conclusion that the 24-months retention requirement strikes an appropriate
balance between ensuring efficient and effective compliance efforts, while avoiding the imposition of
unnecessary costs.

7. Circumstances Requiring Special Information Collection
The collection of information in Regulation N is consistent with the applicable guidelines
contained in 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
We have consulted with the FTC and industry experts to gather information relating to the
burdens of Mortgage Acts and Practices (MAP) and Regulation N. In accordance with 5 CFR
§1320.8(d)(1), the Bureau has published a notice Federal Register allowing the public 60 days to
comment on this proposed the extension (renewal) of this currently approved collection of information.
Furthermore and in accordance with 5 CFR §1320.5(a)(1)(iv), the Bureau also published a notice in the
Federal Register allowing the public 30 days to comment on the submission of this information collection
request to the Office of Management and Budget.
9. Payments or Gifts to Respondents
No payments or gifts are provided to respondents.
10. Assurances of Confidentiality
To the extent that information covered by a recordkeeping requirement is collected by the CFPB
for law enforcement purposes, the confidentiality provisions of CFPB’s rules on Disclosure of Records
and Information, 12 CFR Part 1070, would apply.
11. Justification for Sensitive Questions
Regulation N. only requires covered persons to retain records of communications and
advertisements sent to consumers. As such no questions of a sensitive nature are asked of respondents.

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12. Estimated Burden of Information Collection
Labor Hours: 242
Exhibit 1: Burden Hour Summary
Ongoing Burden

Regulation
§1014.5
§1014.5
Total
CFPB Total

Type
Recordkeeping
(Targeted Ads)
Recordkeeping
(General Ads)

Average Response
Time per
Responses per
Respondents Respondent Respondent (hrs)

Annual Burden
Hours

483

1,377,729

1

483

2,046,607
2,047,090

0

0

0
483
241.5

CFPB’s estimate of the burden for the ongoing recordkeeping requirement under Regulation N is
based on a new analysis conducted after the regulation was restated by the CFPB. For PRA purposes
regarding regulation N, the CFPB and Federal Trade Commission (FTC) share enforcement authority and
thus evenly split the PRA burden associated with affected entities. 2 This burden amounts to 483 hours
total, of which 242 hours are attributed to the CFPB.
To estimate respondents, the CFPB first identified all entitles, including firms and individuals,
who are considered respondents under the law. There are an estimated 2,047,090 respondents who may
be considered covered persons and must comply with Regulation N. The bulk of these respondents are
mortgage lenders, brokers, servicers, real estate agents, and advertising firms. The CFPB maintains the
position taken by the FTC in previous supporting statements that mortgage lenders, brokers, and
servicers customary and usual business practice is to maintain records of advertising material and thus
these respondent’s are ”excluded from the [calculation of] burden” as defined by OMB. 3 The CFPB staff
also identified other state and federal regulations 4 which explicitly or implicitly require respondents
including real estate agents, brokers, and others 5 to retain records of the mortgage advertising activities
to demonstrate compliance. Respondents who are not explicitly required to retain records of mortgage
advertising ordinarily do so in the course of regular business to demonstrate compliance with other state
and federal laws 6. According to OMB guidelines, this burden is not counted in this analysis because the

2

Under the Dodd-Frank Act, the CFPB assumes half the burden imposed non-depository institutions with the FTC.
See PRA 5. C.F.R. § 1320.3(b)(2).
4
A number of state laws explicitly require mortgage advertisement retention, e.g. WA (WAC 208-660-450 ) and DE (76 Del.
Laws, c. 421, § 1)
5
Including advertising agencies, lead generators, online media distributors, home builders and renovators, rate aggregators,
and other depository institutions.
6
See FTC Act § 5, and Regulation Z (12 CFR §1026.25). While §1026.25 does exempt mortgage advertising from the specific
recordkeeping requirement, most entities continue to retain records to demonstrate compliance with sections §1026.16
3

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burden “Would be imposed even in the absence of a federal requirement. 7” For this reason the CFPB
does not assign any burden for the majority of respondents.
There are some respondents for whom the requirement in §1014.5 to keep “Copies of all
materially different commercial communications” may impose an additional recordkeeping burden above
and beyond the ordinary course of business and beyond what would be necessary to demonstrate
compliance with state and federal regulations. These are respondents who practice targeted advertising, a
practice of offering different credit terms to consumers with differet credit backgrounds. Exhibit 1
displays information to the respondents who incur additional burden as a result of the federal regulation.
The CFPB estimates that there are approximately 483 such respondents. Based on information provided
by industry, law, and supervisory sources, the CFPB estimates that these respondents need an hour
annualy to review and maintain compliance with Regulation N.
Associated Labor Costs: $ 8,692
The CFPB calculated labor costs by applying appropriate hourly cost figures to the 241.5
burden hours attributed to the CFPB as described above. The wage estimate is based on data from
the Bureau of Labor statistics. 8 With a composite wage of $35.99, the cost for these labor hours is
gven as 483 hours * $35.99/hour = $17,383 labor cost overall, of which 241.5 hours * $35.99/hour =
$8,692 labor cost is attributed to the CFPB.

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
Associated Material Cost: $2,671,177.36
Exhibit 2: Additional Materials Cost

CFPB’s estimate of the non-labor cost for the ongoing recordkeeping requirement under
Regulation N is based on a new analysis conducted after the regulation was restated by the CFPB. For
PRA purposes regarding regulation N, the CFPB and Federal Trade Commission (FTC) share
enforcement authority and thus evenly split the PRA cost associated with affected entities. The CFPB
estimates that material costs for to begin complying and maintain compliance with Regulation N’s

§1026.24. Examples of such state laws include but are not limited to: VA (18 VAC 135-20-190) WA (18.85 RCW) FL (Title
XXXII Ch. 475 Part 1).
7

See PRA 5. C.F.R. § 1320.3(b)(3).
Wage burden was calculated as a composite wage, with weighting based on previous estimates and information provided
by various industry professionals. Median values from the BLS Occupational Employment and Wages data were used to
estimate a composite wage as 5% Compliance Officer (occupation code 13-1041) at $30.93/hour, 5% Sales Manager
(occupation code 11-2022) at $52.18/hour), 45% Lawyer at $54.95/hour (occupation code 23-1011), and 45% administrative
assistant (occupation code 43-6014) at $15.79/hour), for a composite wage of $35.99.

8

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information collections represent a total non-labor materials cost of $5,342,354.71 in total, of which
$2,671,117.36 is attributed to the CFPB.
One Time Material Burden
Regulation
§1014.5
§1014.5
Total
CFPB Total

Type
Recordkeeping
(Targeted Ads)
Recordkeeping
(General Ads)

Respondents

Per Unit Cost

Quantity per
Respondent

35

19,550.05

1.00

$

684,251.75

35

0.00

0.00

$
$
$

684,251.75
342,125.88

One Time Total

Ongoing Material Burden
Regulation
§1014.5
§1014.5
Total
CFPB Total

Type
Recordkeeping
(Targeted Ads)
Recordkeeping
(General Ads)

Respondents

Per Unit Cost

Quantity per
Respondent

483

$0.01

1,377,729

2,046,607
2,047,090

$0.00

0.00

Ongoing Total
4,658,102

$
$

4,658,101.75
2,329,050.87

Total Material Burden CFPB: $ 2,671,176.75
This estimate is entirely attributable to burden incurred by respondents who advertise
individualized interest rates. Most respondents are assigned zero burden for the same reasons described
above. Regulation N requires advertisers who advertise individualized rates to keep records of the offers
made to each individual and to be able substantiate each offer. This particular requirement extends
beyond retaining copies of general advertising material and imposes a substantial burden. The data used
to estimate the costs is based on privately collected market data as well as internal CFPB and industry
accounting estimates. 9 The high startup cost faced by some respondents results from the need for
complex recordkeeping software that can retain individualized offers and relate their terms to
contemporaneous financial conditions. The material cost-per-advertisement represents a combination of
fixed and marginal costs associated with increasing the size of and information of a recordkeeping
system.
14. Estimated Cost to the Federal Government
As the CFPB does not collect any information, there are no additional costs to the Federal
Government.
9

Data sources include Mintel ®, NMLS, and industry, legal, and supervisory experts.

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15. Program Changes or Adjustments
Exhibit 3: Summary of Burden Changes
Total Respondents
Total Annual Burden
Requested
Current OMB Inventory
Difference (+/-)
Program Change
Discretionary
New Statute
Violation
Adjustment

483
1,300,000
-1,299,517
0
0
0
0
-1,299,517

Annual Responses

Burden Hours

Material Cost

665,443,107

242

1,300,000
664,143,107
0
0
0
0
664,143,107

1,950,000
-1,949,758.00
0
0
0
0
-1,949,758.00

$

2,671,176
0
2,671,176
$0
$0
$0
$0
2,671,176

$

$

The CFPB estimates that there are 2,047,090 covered persons who must comply with regulation
N. However, as described in section 12, the CFPB estimates that regulation N imposes burden on only
483 of these respondents beyond that which is customary and usual business practice as well as covered
by various other state and federal regulations. The change in number of responses is attributed to the fact
that previously the CFPB had not calculated the number of responses in total, but instead had only
calculated the time it would take each respondent to comply with the regulation. The drop in burden
hours is due to the CFPB’s belief that real estate agents and other advertisers already keep records of
their advertising as part of their ordinary course of business or as a means of demonstrating compliance
with state and federal regulations. 10 Thus the change in burden hours is directly related to the decrease in
respondents who incur burden due to Regulation N. The materials cost burden represents costs that were
previously unaccounted for because the sources used were not previously available. 11
The CFPB believes that the revised burden estimates more accurately reflect the extent to which
compliance with MAP imposes an additional burden beyond that imposed by other state and federal
regulations, and furthermore that the revised estimates better reflect the market structure of mortgage
advertisers and the distribution of cost amongst covered persons.
16. Plans for Tabulation, Statistical Analysis, and Publication
There are no plans to provide any publications based on the information collection of this
regulation.

10

6

See above
Although some of the material costs may have been accounted for in the generalized estimates of “labor costs” in
previous PRA analysis.
11

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17. Display of Expiration Date
The OMB control number and expiration date associated with this PRA submission will be
displayed on the Federal government’s electronic PRA docket at www.reginfo.gov, as well as in the
Code of Federal Regulations. There are no forms or documents on which the display of the OMB
control number would be appropriate as this is a record retention regulation.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements of 5
CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an exemption to these
certification requirements.

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