82 FR 26705 - Privacy Act of 1974; System of Records: Loan Review System (LRS)

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 82, Issue 109 (June 8, 2017)

In accordance with the Privacy Act of 1974, the Department of Housing and Urban Development (HUD), Office of Lender Activities and Program Compliance provides public notice it proposes to establish a new system, Department of Housing and Urban Development system of records titled, ``Loan Review System (LRS)''.

[Federal Register Volume 82, Number 109 (Thursday, June 8, 2017)]
[Notices]
[Pages 26705-26708]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11935]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. 6009-N-01]


Privacy Act of 1974; System of Records: Loan Review System (LRS)

AGENCY: Office of Administration, HUD.

ACTION: Notice of a New System of Records.

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SUMMARY: In accordance with the Privacy Act of 1974, the Department of 
Housing and Urban Development (HUD), Office of Lender Activities and 
Program Compliance provides public notice it proposes to establish a 
new system, Department of Housing and Urban Development system of 
records titled, ``Loan Review System (LRS)''.

DATES: Effective Date: This system will become effective July 10, 2017.
    Comments Due Date: July 10, 2017.

ADDRESSES: You may submit comments, identified by docket number and 
title, by one following method:
    Federal e-Rulemaking Portal: http://www.regulations.gov. Follow the 
instructions provided on that site to submit comments electronically.
    Fax: 202-619-8365.
    Email: [email protected].
    Mail: Attention: Housing and Urban Development, Privacy Office; 
Marcus Smallwood, The Executive Secretariat; 451 Seventh Street SW., 
Room 10139; Washington, DC 20410.
    Instructions: All submissions received must include the agency name 
and docket number for this Federal Register document. The general 
policy for comments and other submission from members of the public is 
provide three submissions for public viewing on the internet at http://www.regulations.gov, as they are received without change, including any 
personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: For general questions please contact: 
Marcus Smallwood, Acting, Chief Privacy Officer, Department of Housing 
and Urban Development, 451 Seventh Street SW., Washington, DC 20410; 
telephone number 202-708-1515 for privacy issues please contact:

SUPPLEMENTARY INFORMATION: The LRS will provide a unified loan review 
process to improve HUD's ability to identify and mitigate loan-level 
risk and fraud in its Federal Housing Administration (FHA) Title II 
Single Family Housing program. The LRS will implement the newly 
developed Loan Quality Assessment Methodology (Defect Taxonomy) and 
will provide a standard approach for all loan reviews in order to:

     Communicate clear policy messages to involved 
counterparties;
     Encourage lending to FHA targeted populations;
     Provide feedback on the effectiveness of FHA's 
underwriting policies; and
     Provide a communication channel for lenders to view and 
respond to review findings.

    The LRS will include policy automation, electronic case management, 
automated workflows, event-driven communications, enhanced reporting 
and advanced business intelligence/analytics. The LRS

[[Page 26706]]

will support holistic risk management through monitoring performance 
and policy compliance of lenders, including identification of key 
performance characteristics, risk drivers and comparative performance 
across counterparties. Reviews will include both loan and lender 
reviews. Loan reviews will be focused on both underwriting and 
servicing activities and will provide reviewers with questions to help 
drive a standardized review across FHA Single Family Homeownership 
Centers.
    This system of records is operated by Department of Housing and 
Urban Development (HUD)'s Office of Lender Activities and Program 
Compliance, and includes personally identifiable information (PII) 
provided by or about individuals from which information is retrieved by 
a name or unique identifier. This notice incorporates Federal privacy 
requirements and HUD policy requirements. The Privacy Act provides 
certain safeguards for an individual against an invasion of personal 
privacy by requiring Federal agencies to protect records in an agency 
system of records from unauthorized disclosure, ensure that information 
is current for its intended use, and that adequate safeguards are 
provided to prevent misuse of such information. The notice reflects the 
Department's focus on industry best practices in protecting the 
personal privacy of the individuals covered by each system 
notification. This notice states the name and location of the record 
system, the authority for and manner of its operations, the categories 
of individuals it covers, the records it contains, the sources of the 
information for those records, the routine uses made of the records, 
and the system of records exemption types. In addition, the notice 
includes the business address of the HUD officials who will inform 
interested persons of the procedures whereby they may gain access to 
and/or request amendments to records pertaining to them. The routine 
uses that apply to this publication are reiterated based on past 
publication to clearly communicate how HUD continues to conduct some of 
its business practices.
    In accordance with 5 U.S.C. 552(a)(e)(4)(11), HUD has provided a 
report of this new system to the Office of Management and Budget (OMB), 
the Senate Committee on Homeland Security and Governmental Affairs, and 
the House Committee on Oversight and Government Reform as instructed by 
OMB Circular No. A-108, ``Federal Agencies Responsibilities for Review, 
Reporting, and Publication under the Privacy Act.''
SYSTEM NAME AND NUMBER:
    Loan Review System (LRS)--HUD.HSNG/SF.001.

SECURITY CLASSIFICATION:
    Unclassified, but sensitive.

SYSTEM LOCATION:
    Loan Review System is hosted at the Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington, DC 20410, or at the 
locations of the service providers under contract with HUD. Paper 
records will be stored in the designated secure National Archives and 
Records Administration Federal Records Centers.

SYSTEM MANAGER(S):
    Marcus Smallwood, Acting, Chief Privacy Officer, Department of 
Housing and Urban Development, 451 Seventh Street SW., Washington, DC 
20410; telephone number 202-402-5581.

AUTHORITY FOR MAINTENANCE OF THE SYSTEM:
    Section 203 of the National Housing Act (12 U.S.C. 1701l-1, 
1708(a), 1709(r), and 1715(u)); 42 U.S.C. 3543 ``Preventing fraud and 
abuse in Department of Housing and Urban Development programs'' 
(enacted as part of the Housing and Community Development Act of 1987); 
and 31 U.S.C. 7701 (The Debt Collection Improvement Act of 1986).

PURPOSE(S) OF THE SYSTEM:
    The purpose of the Loan Review System (LRS) is to build on existing 
Federal Housing Administration (FHA) Title II Single Family loan review 
efforts, align the documentation of loan review results across 
counterparties, and incorporate the newly developed Loan Quality 
Assessment Methodology (Defect Taxonomy). The Defect Taxonomy provides 
a standard approach for all FHA Title II loan reviews for Single Family 
Housing Programs in order to:

     Communicate clear policy messages to involved 
counterparties;
     Encourage lending to FHA targeted populations;
     Provide feedback on the effectiveness of FHA underwriting 
policies;
     Support holistic risk management through monitoring 
performance and policy compliance of lenders; and
     Identify key performance characteristics, risk drivers and 
comparative performance across counterparties.

    The FHA Title II reviews will include both loan and lender reviews 
that focus on both underwriting and servicing activities to provide HUD 
reviewers with the questions to help drive standardized reviews across 
FHA Homeownership Centers. It will additionally provide communication 
channels for lenders to view and respond to issues found in the 
reviews.
    The LRS will manage FHA's Title II Quality Control Reviews: Title 
II test case loan reviews, various Title II post-endorsement loan 
reviews, Title II lender monitoring reviews, and Title II loans 
reported by lenders due to instances of fraud and misrepresentation or 
other material findings (commonly known as ``self-reports''). LRS is 
not designed to manage any aspect of FHA's standard (non-test case) 
loan origination or endorsement processes. Following a transition, LRS 
will merge the loan review workload management functions performed by 
the Underwriting Review System, and the Approval Recertification, 
Review Tracking System into a single integrated application. In 
addition, LRS will assume the lender reporting functions managed in the 
Neighborhood Watch Early Warning System.

CATEGORIES OF INDIVIDUALS COVERED BY THE SYSTEM:
    The categories of individuals covered by the system include 
Mortgagors (Borrowers) who have obtained a mortgage insured under the 
Department of Housing and Urban Development (HUD)/Federal Housing 
Administration Single Family mortgage insurance program; Mortgagee 
(Lender) staff Appraisers, Underwriters and Loan Officers involved in 
appraising, underwriting or servicing the mortgage; and HUD Employees 
involved in the loan review process.

CATEGORIES OF RECORDS IN THE SYSTEM:
    The categories of records maintained by the system include:
     Mortgagor (Borrower): Borrower(s) Full Name, Borrower(s) 
Social Security number, Borrower(s) Date of Birth, Income, Credit 
Score, Non-Borrowing Spouse Social Security number.
     Mortgagee (Lender Institution): Originating, Underwriting 
and/or Servicing Mortgagee Institution ID, Institution Name, 
Institution Type, Institution Status, Branch Type, Branch ID, 
Nationwide Multistate Licensing System ID.
     Mortgagee Appraiser: First Name, Last Name, Middle Name, 
Suffix.
     Mortgagee Underwriter: First Name, Last Name, Middle Name, 
Suffix, Federal Housing Administration FHA Underwriter ID.

[[Page 26707]]

     Mortgagee Loan Officer: First Name, Last Name, Middle 
Name, Nationwide Multistate Licensing System ID.
     HUD Employees: Names and identification of all HUD 
employees with access to the system records. Also, identification 
information is stored for employees who work with mortgage applications 
through Federal Housing Administration Connection.
     Case Information: Federal Housing Administration Case 
Number, Case Established Date, Case Reinstatement Date, Case Type.
     Case Property: Basement Code, Neighborhood Percentage 
Owned, Neighborhood Predominate, Price, Subdivision Indicator, Property 
Acquisition Date, Property Street, Property Conversion Type, Rural 
Neighborhood Code, Neighborhood Single Family Home Percentage, 
Subdivision Lot Indicator, Building Type, Date of Sale or Transfer, 
Sale Amount, Year Built, City, Zip, Geocode Flag, Underserved 
Indicator, Block, Lot, House Number, Street Number.
     Servicing Status: Servicing Status, Claims, and 
Indemnification Agreements.

RECORD SOURCE CATEGORIES:
    Mortgagors, appraisers, mortgagee staff, underwriters, and the 
Department of Housing and Urban Development (HUD) employees provide 
data to the originating source systems. The originating source systems 
then pass select data onto the Enterprise Data Management (EDM). LRS 
includes direct interfaces to these systems:
     P302--Enterprise Data Management (EDM)
     F17--Computerized Homes Underwriting Management System 
(CHUMS)
     F17C--FHA Connection (FHAC)
     P278--Lender Electronic Assessment Portal (LEAP)
    The originating source systems application for HUD/FHA Insured 
Mortgage--Forms HUD 92900-A, HUD-92900-B, HUD-92900-LT, HUD 92544, HUD-
92561, Model Notice Informed Consumer Choice Disclosure, Model Pre-
Insurance Review Checklist for Lender Insurance.

ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING CATEGORIES 
OF USERS AND THE PURPOSES OF SUCH USES:
    In addition to those disclosures generally permitted under 5 U.S.C. 
Section 552a(b) of the Privacy Act, all or a portion of the records or 
information in this system may be disclosed to authorized entities, as 
determined to be relevant and necessary, outside the Department of 
Housing and Urban Development (HUD) as a routine use pursuant to 5 
U.S.C. 552a(b)(3):
    1. To appropriate agencies, entities, and persons for disclosures 
compatible with the purpose for which the records in this system were 
collected, as set forth by Appendix I--HUD's Routine Use Inventory 
Notice published in the Federal Register (80 FR 81837-81840),:
    a. To the National Archives and Records Administration or to the 
General Services Administration for records having enough historical or 
other value to warrant continued preservation by the United States 
Government, or for inspection under Title 44 U.S.C. 2904 and 2906.
    b. To a congressional office from the record of an individual, in 
response to an inquiry from that congressional office made at the 
request of that individual.
    c. To contractors performing or working under a contract with HUD, 
when necessary to accomplish an agency function related to this system 
of records. Disclosure requirements are limited to only those data 
elements considered relevant to accomplishing an agency function. 
Individuals provided information under these routine use conditions are 
subject to Privacy Act requirements and disclosure limitations imposed 
on the Department.
    d. To the Department of Justice(DOJ) when seeking legal advice for 
a HUD initiative or in response to DOJ's request for the information, 
after either HUD or DOJ determine that such information relates to 
DOJ's representatives of the United States or any other components in 
legal proceedings before a court or adjudicative body, provided that, 
in each case, the agency also determines prior to disclosure that 
disclosure of the records to DOJ is a use of the information in the 
records that is compatible with the purpose for which HUD collected the 
records. HUD on its own may disclose records in this system of records 
in legal proceedings before a court or administrative body after 
determining that the disclosure of the records to the court or 
administrative body is a use of the information contained in the 
records that is compatible with the purpose for which HUD collected the 
records.
    2. To HUD business partners (Mortgagees) to fulfill their business 
arrangements with HUD for managing quality control review 
responsibilities associated with FHA-insured single family mortgage 
loans. Information that is accessible to Mortgagees through LRS is 
limited only to records where the Mortgagee is the originating, 
underwriting, servicing or holding institution of record. This 
information may only be accessed through an FHA Connection user ID and 
password.
    3. To appropriate agencies, entities, and persons as necessary 
when:
    (a) HUD suspects or has confirmed that there has been a breach of 
the system of records,
    (b) HUD has determined that as a result of the suspected or 
confirmed breach there is a risk of harm to individuals, HUD (including 
its information systems, programs, and operations), the Federal 
Government, or national security; and
    (c) The disclosure made to such agencies, entities, and persons is 
reasonably necessary to assist in connection with HUD efforts to 
respond to the suspected or confirmed breach or to prevent, minimize, 
or remedy of such harm.
    4. To another Federal agency or Federal entity, when HUD determines 
that information from this system of records is reasonably necessary to 
assist the recipient agency or entity in:
    (a) Responding to a suspected or confirmed breach or,
    (b) Preventing, minimizing, or remedying the risk of harm to 
individuals, the recipient agency or entity (including its information 
systems, programs, and operations), the Federal Government, or national 
security, resulting from a suspected or confirmed breach.

POLICIES AND PRACTICES FOR STORAGE OF RECORDS:
    Mitigation documentation will be stored using the enterprise 
content management platform (Alfresco software) in the Azure cloud 
environment. Automated records are also stored and maintained in the 
Azure cloud environment. Paper binders collected for reviews will be 
stored in the designated secure Federal Records Centers, which are used 
to store paper binders reviewed for endorsement.

POLICIES AND PRACTICES FOR RETRIEVAL OF RECORDS:
    Records are retrieved by Federal Housing Administration case number 
or Loan Review System review identification number.

POLICIES AND PRACTICES FOR RETENTION AND DISPOSAL OF RECORDS:
    Electronic records of cases established are retained and disposed 
of in accordance with the Department of Housing and Urban Development 
approved Records Retention and Disposition Schedule approved by the 
National Archives and Records Administration (NARA). Privacy Act/
Freedom of Information Act disclosures are retained in accordance with 
the

[[Page 26708]]

NARA General Records Schedule. Schedule 15 Item 1a, permits HUD to 
delete when no longer for agency use. Longer retention periods exist 
for original content in source systems.

ADMINISTRATIVE, TECHNICAL, AND PHYSICAL SAFEGUARDS:
    Automated records are maintained in secured areas within the 
system. Access is limited to authorized personnel with a need-to-know 
based on unique FHA Connection User IDs and confidential passwords. 
Physical entry by unauthorized person is restricted though the use of 
locks, guards, passwords, and/or other security measures. Paper records 
are maintained and secured, limited access and monitored areas.

RECORD ACCESS PROCEDURES:
    For information, assistance, or inquiry about records, contact 
Marcus Smallwood, Acting, Chief Privacy Officer 451 Seventh Street SW., 
Room 10139, Washington, DC 20410, telephone number (202) 708-3054. When 
seeking records about yourself from this system of records or any other 
Housing and Urban Development (HUD) system of records, your request 
must conform with the Privacy Act regulations set forth in 24 CFR part 
16. You must first verify your identity, meaning that you must provide 
your full name, address, and date and place of birth. You must sign 
your request, and your signature must either be notarized or submitted 
under 28 U.S.C. 1746, a law that permits statements to be made under 
penalty of perjury as a substitute for notarization. In addition, your 
request should:

    a. Explain why you believe HUD would have information on you.
    b. Identify which Office of HUD you believe has the records about 
you.
    c. Specify when you believe the records would have been created.
    d. Provide any other information that will help the Freedom of 
Information Act (FOIA), staff determine which HUD office may have 
responsive records.

    If your request is seeking records pertaining to another living 
individual, you must include a statement from that individual 
certifying their agreement for you to access their records. Without the 
above information, the HUD FOIA Office may not conduct an effective 
search, and your request may be denied due to lack of specificity or 
lack of compliance with regulations.

CONTESTING RECORD PROCEDURES:
    The Department's rules for contesting contents of records and 
appealing initial denials appear in 24 CFR part 16, Procedures for 
Inquiries. Additional assistance may be obtained by contacting Marcus 
Smallwood, Acting, Chief Privacy Officer, 451 Seventh Street SW., Room 
10139, Washington, DC 20410, or the HUD Departmental Privacy Appeals 
Officers, Office of General Counsel, Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington DC 20410.

NOTIFICATION PROCEDURES:
    Individuals seeking notification of and access to any record in 
this system of records, or seeking to contest its content, may submit a 
request in writing to the component's FOIA Officer, whose contact 
information can be found at http://www.hud.gov/foia under ``contact'' 
if an individual believes more than one component maintains Privacy Act 
records about him or her, the individual may submit the request to the 
Chief Privacy Officer, HUD, 451 Seventh Street SW., Room 10139, 
Washington, DC 20410.

EXEMPTIONS PROMULGATED FOR THE SYSTEM:
    None.

HISTORY:
    None.

    Dated: May 4, 2017.
Helen Goff Foster,
Senior Agency Official for Privacy.
[FR Doc. 2017-11935 Filed 6-7-17; 8:45 am]
 BILLING CODE 4210-67-P