3170-0009 MAP (N) 2018 renewal-FO 30-dayFRN_OMB

30-day Federal Register Notice Version (2018 Renewal)

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 September 21, 2015
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 (BCFP) 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 may be used by the BCFP, 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.

1

Regulation N, § 1014.5.

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6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
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
The Bureau consulted with the FTC and industry experts to gather information relating to the
burdens of Mortgage Acts and Practices (MAP) and Regulation N when first estimating this burden. In
accordance with 5 CFR §1320.8(d)(1), the Bureau 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. No comments were receveid in response to that notice. 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 BCFP
for law enforcement purposes, the confidentiality provisions of BCFP’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: 483
Exhibit 1: Burden Hour Summary

Regulation

1015.4(a)

1015.4(b)

Description
General
Commercial
Communications
Disclosure
ConsumerSpecific
Communications
Disclosure(s)

Total Labor Burden
CFPB Share

Ongoing Labor Burden
Responses
per
Respondent

Annual Burden
Hours per
Respondent

Hourly
Rate

483

1,377,729

1

38.04

2,046,607

-

0

No. of
Respondents

2,047,090.0

Total
Burden
Hours

Associated
Labor
Costs

483

$18,373

0

-

483
242

$18,373
$9,187

BCFP’s estimate of the burden for the ongoing recordkeeping requirement under Regulation N is
based on an analysis conducted after the regulation was restated by the BCFP. For PRA purposes
regarding regulation N, the BCFP 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 BCFP.
To estimate respondents, the BCFP first identified all entities, 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 BCFP 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 BCFP 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
Under the Dodd-Frank Act, the BCFP 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.
2
3

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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
burden “Would be imposed even in the absence of a federal requirement. 7” For this reason the BCFP
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 BCFP estimates that there are approximately 483 such respondents. Based on information provided
by industry, law, and supervisory sources, the BCFP estimates that these respondents need an hour
annualy to review and maintain compliance with Regulation N.
Associated Labor Costs: $ 9,187
The BCFP calculated labor costs by applying appropriate hourly cost figures to the 241.5
burden hours attributed to the BCFP as described above. The wage estimate is based on data from
the Bureau of Labor statistics. 8 With a composite wage of $38.04, the cost for these labor hours is
gven as 483 hours * $38.04/hour = $18,373 labor cost overall, of which 242 hours * $38.04/hour =
$9,187 labor cost is attributed to the BCFP.

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
Associated Material Cost: $2,671,177.36
Exhibit 2: Additional Materials Cost
BCFP’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 BCFP. For
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
§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).
6

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 $32.63/hour, 5% Sales Manager (occupation code
11-2022) at $58.2/hour), 45% Lawyer at $57.33/hour (occupation code 23-1011), and 45% administrative assistant
(occupation code 43-6014) at $17.11/hour), for a composite wage of $38.04.
7
8

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PRA purposes regarding regulation N, the BCFP and Federal Trade Commission (FTC) share
enforcement authority and thus evenly split the PRA cost associated with affected entities.
Ongoing Material Burden

Regulation

1015.4(a)
1015.4(b)

Description
General Commercial
Communications Disclosure
Consumer-Specific
Communications
Disclosure(s)

Total Labor Burden
CFPB Share

No. of
Respondents
483
2,046,607
2,047,090.0

Responses per
Respondent
1,377,729
-

Per Unit Cost
0.007
0

Associated
Labor Costs
$ 4,658,102
$

$4,658,102
$2,329,051

Total Material Burden BCFP: $ 2,329,051
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 additional burden. The data used to
estimate the costs is based on privately collected market data as well as internal BCFP and industry
accounting estimates. 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 BCFP does not collect any information, there are no additional costs to the Federal
Government.

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15. Program Changes or Adjustments
Exhibit 3: Summary of Burden Changes

Total Requested
Current OMB
Inventory
Difference
Program Change
Discretionary
New Statue
Violation
Adjustment

Annual
Responses

483

665,443,107

Burden
Hours
242

483

665,443,107

242

2,671,176

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

-342,125
$0
$0
$0
$0
-342,125

Total Respondents

Cost Burden
2,329,051

The BCFP is requesting a reduction in its materials cost allocation of $342,125 due to the
elimination of one-time material burden.
16. Plans for Tabulation, Statistical Analysis, and Publication
There are no plans to provide any publications based on the information collection of this
regulation.
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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