[Federal Register Volume 77, Number 196 (Wednesday, October 10, 2012)]
[Pages 61620-61623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-24927]



[Docket No. FR-5613-N-10]

Privacy Act of 1974; Home Equity Reverse Mortgage Information 
Technology (HERMIT)--Notice of Modification to, and Deletion of HUD/HS-
10, Home Equity Conversion Mortgage System

AGENCY: Office of the Chief Information Officer HUD.

ACTION: Notification of modification to, and deletion of existing 
system of records notification.


SUMMARY: Pursuant to the provision of the Privacy Act of 1974, as 
amended (5 U.S.C. 552a), the Department of Housing and Urban 
Development (HUD) is providing notice of its intent to modify and 
delete one of its system of records notifications, the HUD/HS-10, Home 
Equity Conversion Mortgage (HECM) system. HUD/HS-10, HECM is being 
modified and replaced by the new HECM program system, Home Equity 
Reverse Mortgage Information Technology (HERMIT). The modifications for 
the existing system of

[[Page 61621]]

records notification will reflect clarification of system activities 
which result in minor changes to the existing system of records 
notification: Categories of Individuals covered by the system 
(including categories of users and purposes of such users); Categories 
of Records covered by the system (and in the system); Purposes of the 
system; New system record locations, New naming convention for system, 
Routine uses category assigned (and purpose of such uses). All 
revisions are conducted to reflect the present status of the 
information contained in the system. The HERMIT system will allow 
Housing to consolidate many of the HECM program activities and improve 
the effectiveness of the program. The present state of the system is 
clarified in the supplementary and purpose information section. The 
scope and/or business objectives of the Home Equity Conversion Mortgage 
Program remain unchanged. The HUD/HS-10, HECM system of records 
notification will be obsolete upon publication of this notice.

DATES: Effective Date: This proposal shall become effective, without 
further notice, November 9, 2012, unless comments are received during 
or before this period which would result in a contrary determination.
    Comments Due Date: November 9, 2012.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice to the Rules Docket Clerk, Office of General Counsel, 
Department of Housing and Urban Development, 451 Seventh Street SW., 
Room 10276, Washington, DC 20410-3000. Communications should refer to 
the above docket number and title. FAX comments are not acceptable. A 
copy of each communication submitted will be available for public 
inspection and copying between 8:00 a.m. and 5:00 p.m. weekdays at the 
above address.

FOR FURTHER INFORMATION CONTACT: Inquiries pertaining to Privacy Act 
records, contact Donna Robinson-Staton, Chief Privacy Officer, 
telephone number (202) 402-8073, 451 Seventh Street SW., Washington, DC 
20410 (Attention: Capitol View Building, 4th Floor) [The above 
telephone numbers are not toll free numbers.] A telecommunications 
device for hearing- and speech-impaired persons (TTY) is available by 
calling the Federal Information Relay Service's toll-free telephone 
number (800) 877-8339.

SUPPLEMENTARY INFORMATION: Pursuant to the Privacy Act of 1974 (5 
U.S.C. 552a), Pursuant to the Privacy Act of 1974 (5 U.S.C. 552a), as 
amended, notice is given that HUD proposes to modify an existing system 
of records, the HUD/HS-10, Home Equity Conversion Mortgage system. This 
notice provide a summary of the modified system of records. The system 
will be identified by a new naming convention ``HSG/HWAT.01'' that has 
been established by the Department to refer to a program component 
system. The system of records is revising its routine use category to 
balance the privacy interests of those entities requiring access to 
system records to allow HUD's Federal Housing Administration (FHA) to 
carry out its HECM program activities. The system also refines its 
sections for category of individual, and category of records to provide 
clarification of the types of records collected and maintained by the 
system. Additionally, the system contains personally identifiable 
information received from mortgagees and housing counseling agencies 
approved to administer FHA HECM program requirements. The information 
in the system includes (but is not limited to) individual level data 
regarding borrowers who participate in the HECM program: Name, title, 
property addresses, birthdates, Social Security Numbers, phone numbers 
and (dates of death, when applicable). In addition the information in 
the system includes (but is not limited to) business level data 
regarding the mortgagee that administers FHA HECM loans: banking 
information, Tax Identification Number, routing and accounts numbers, 
mortgagee reference number, and accounting data. The HERMIT system is 
expected to improve the overall effectiveness of the program operations 
by providing comprehensive insurance servicing, claims payments, notice 
servicing, accounting and reporting functionalities. The report of the 
system of records modification/deletion was submitted to the Office of 
Management and Budget (OMB), the Senate Committee on Homeland Security 
and Governmental Affairs, and the House Committee on Government Reform 
pursuant to Paragraph 4c of Appendix l to OMB Circular No. A-130, 
``Federal Agencies Responsibilities for Maintaining Records About 
Individuals,'' July 25, 1994 (59 FR 37914).

    Authority:  5 U.S.C. 552a; 88 Stat. 1896; 42 U.S.C. 3535(d).

    Dated: September 13, 2012.
Kevin Cooke,
Deputy Chief Information Officer.

System Name:
    Home Equity Reverse Mortgage Information Technology (HERMIT) 
Service Provider formerly HUD/HS-10, Home Equity Conversion System

 System Location:
    External hosting location at the following address: 21701 Filigree 
Ct., Building D, Ashburn, VA 20147; Housing and Urban Development (HUD) 
workstations at 451 Seventh Street SW., Washington, DC 20410; HUD 
National Servicing Center 2 West 2nd Street, Suite 400, Tulsa, OK 
74103; HUD Atlanta Homeownership Center, Five Points Plaza 40 Marietta 
Street, Atlanta, GA 30303-2806; HUD Philadelphia Homeownership Center, 
The Wanamaker Building, 100 Penn Square East, Philadelphia, PA 19107-
3389; HUD Denver Homeownership Center Processing & Underwriting--20th 
FL 1670 Broadway Denver, CO 80202; Santa Ana Homeownership Center, 
Santa Ana Federal Building, 34 Civic Center Plaza, Room 7015, Santa 
Ana, CA 92701-4003.

Categories of individuals covered by the system:
    HECM mortgagees and HECM mortgagors for Home Equity Conversion 
Mortgages insured under HUD's HECM mortgage insurance program, and FHA-
Approved Housing Counselors who participate in the HECM program.

Categories of records in the system:
    The categories of records in the HERMIT system are as follows:
    (1) Insurance-in-Force (IIF)/Premiums: HECM insurance-in-force and 
premium records which include PII data pertaining borrowers' full 
names, property addresses, birthdates, Social Security Numbers, phone 
numbers and dates of death; case-level details on the HECM housing 
counseling certificate, Maximum Claim Amount (MCA), property appraised 
values, initial and monthly mortgage insurance premiums (IMIP & MMIP), 
set asides, note interest rates and expected interest rates and case 
statuses and sub-case statuses; payment plan types, and other financial 
account data such as Principal Limits, monthly interest accruals, late 
charge and interest charge fees, historical transaction records for 
HECM cases, property taxes and hazard insurance amounts, business 
partners' banking information (routing and account numbers); and 
accounting data

[[Page 61622]]

including accounts receivable and payable due to and from HUD.
    (2) HECM Claims: Borrowers' names, addresses, social security 
numbers; maximum claim amount, due and payable approvals; death 
notifications, deed-in-lieu; foreclosure actions, extension approvals, 
interest rates and account statuses; payment and other financial 
account data such as unpaid loan balances, interest accrued, service 
fees, expenses incurred for foreclosure and acquisition, protection and 
preservation, attorney fees, special assessments; disbursements for 
taxes, insurance, utilities, eviction fees, and any other miscellaneous 
disbursements; MIP, appraisals, closing costs; claims filed and paid; 
indemnifications and claim blocks; business partner banking information 
(Tax Identification Number, routing and account numbers), mortgagee 
reference number; accounting data including established accounts 
receivables and payables; and information for reporting and assumption 
of servicing activities in cases of investor claim or default.
    (3) HECM Loan Servicing: Borrowers' and authorized contacts' names 
and addresses, birthdates, age, Social Security Numbers, phone numbers; 
email addresses; marital status, gender, preferred language, banking 
information (institutional information, routing, account numbers and 
account type) maximum loan amounts, premium collection, interest rates 
and account statuses; payment and other financial account data such as 
loan balance, loan history, interest accrued, fees incurred, claims 
filed and paid, real estate property information, property taxes and 
insurance amounts, accounting data including debits and credits to HUD 
accounts based on transaction events, vendor information; and 
information for reporting and assuming servicing activities in case of 
servicer or investor claim or default.

Authority for maintenance of the system:
    Section 255 of the National Housing Act of 1934 authorizes the FHA 
reverse mortgage program for the elderly, the Home Equity Conversion 
Mortgage (HECM) program (12 U.S.C.1715Z-20). The Housing and Community 
Development Act of 1987 (42 U.S.C. 3543--Sec. 3543) specifically 
provides authority to collect Social Security Numbers.

    HERMIT provides FHA with a comprehensive service that integrates 
and automates five operations of the HECM program (insurance servicing; 
claims payment; notes servicing, accounting, and reporting). The HECM 
program promotes continued homeownership for the elderly by allowing 
elderly borrowers to access the equity in their homes while continuing 
to live in the property. HERMIT allows the Secretary to maintain the 
``public trust'' over the HECM program by seamlessly, accurately and 
timely managing the HECM program in an automated environment. HERMIT 
allows HECM program personnel to collect and maintain the data 
necessary to support activities related to the endorsement of loans, 
including collection of initial and monthly premiums. The claims 
process includes the filing of claims for insurance benefits and 
disbursement of funds to lenders of loans insured under the HECM 
program. Servicing activities include maintaining the data necessary to 
support performance requirements of servicing for FHA insured and 
Secretary-held first and second mortgages. The major activities include 
acceptance of assignment and title review, servicing requests for HECM 
endorsed cases from Mortgagees (due and payable, short sale, over-
allowables for preservation and protection costs, subordination 
extension requests and partial releases), accounting functions, 
collections according to the Fair Debt Collection Practices Act, 
disbursement of payment, annual recertification, foreclosure 
activities, bankruptcy activities, and compliance monitoring. The new 
HERMIT replacement system will permit HECM mortgagees to: (1) Interact 
with one, integrated HUD HECM system; (2) Interact with HUD's National 
Servicing Center (NSC) through a new, automated workflow process; and, 
(3) Replace manual claims filing processes with an online, automated 
claims filing procedure.

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 
subsection (b) of the Privacy Act of 1974, 5 U.S.C. 522a(b), other 
routine uses are as follows:
    (1) To servicing mortgagee to give notice of miscalculations or 
other errors in subsidy computation, to pay claims, or for other 
servicing-related functions.
    (2) To taxing authorities, insurance companies, homeowners 
associations or condominium associations for maintaining the property 
while HUD is the servicer of record to ensure property taxes are 
    (3) To the U.S. Department of the Treasury for collection and 
disbursement transactions (Pay.gov, ACH and check).
    (4) To title insurance companies or financial institutions to allow 
HUD to respond to inquiries for payoff figures on HECM assigned loans.
    (5) To recorders' offices for recording legal documents and 
responses to bankruptcy courts or other legal responses required during 
the servicing of the insured loan to allow HUD to release mortgage 
liens, respond to bankruptcies or deaths of mortgagors to protect the 
interest of the Secretary of HUD.
    (6) To the Federal Bureau of Investigation (FBI) to investigate 
possible fraud revealed in the course of servicing efforts to allow HUD 
to protect the interest of the Secretary.
    (7) To an Administrative Law Judge and to the interested parties to 
the extent necessary for conducting administrative proceedings where 
HUD is a party.
    (8) To welfare agencies for fraud investigation to allow HUD to 
respond to state government inquiries when a HECM mortgagor is 
committed to a nursing home.
    See also on HUD's privacy Web site, Appendix 1 for discretionary 
routine uses that may be applicable to this system of records.

Policies and practices for storing, retrieving, accessing, retaining, 
and disposing of records in the system:
    Electronic files are stored in case files on servers and backup 
files are stored on tapes. Electronic files are replicated at a 
disaster recovery offsite location in case of loss of computing 
capability or other emergency at the primary facility. HERMIT has no 
hard ``Paper'' copies.

    Access to electronic records are granted by user ID and password to 
users who have a need to know such records. In addition to the 
safeguards provided by access controls all electronic data is encrypted 
while stored on any systems media within HERMIT or in any transport 
mode. Servers are contained in a secured facility with 24x7 security 
guards including electronic access and surveillance capabilities (CCTV 
and recorders, motion detectors, hand geometry readers, fiber vault) at 
an offsite location. HERMIT has no hard ``Paper'' copies.

    Name, SSN, identification number, home telephone number, personal 
email address, FHA Case Number and Mortgagee TIN.

[[Page 61623]]

Retention and Disposal:
    Records are held in accordance with HUD's Records Disposition 
Schedules Handbook (2225.6) Appendix 20(Single Family Home Mortgage 
Insurance Program Records) and Appendix 21(Financial Management 
Information Systems. Paper records are not in use. Electronic records 
are held consistent with standards for paper records. Archival tape 
media is kept for 7 years and the tapes are in rotation. Tapes that are 
faulty and need to be disposed of follow HUD's IT Security Handbook 
(2400.25), pursuant to NIST SP 800-88 guidelines section 2.1.

System Managers and Address:
    Director, Office of Housing Finance and Budget; Department of 
Housing and Urban Development, 451 Seventh Street SW., Washington, DC 

Notification and Access procedures:
    Individuals seeking to determine whether this system of records 
contains information about them, or those seeking access to such 
records, should address inquiries to Chief Privacy Officer, Department 
of Housing and Urban Development, 451 Seventh Street SW., Room 4156, 
Washington, DC 20410. (Attention: Capitol View Building, 4th Floor) 
Requestors must provide identity verification by providing two proofs 
of official identification. Your verification of identity must include 
your original signature and must be notarized.

Contesting record procedures:
    The Department's rules for contesting the contents of records and 
appealing initial denials, by the individual concerned, appear in 24 
CFR Sec.  16. If additional information or assistance is needed, it may 
be obtained by contacting:
    (i) In relation to contesting contents of records, the Privacy Act 
Officer at the appropriate location;
    (ii) In relation to appeals of initial denials, the HUD 
Departmental Privacy Appeals Officer, Office of General Counsel, 
Department of Housing and Urban Development, 451 Seventh Street SW., 
Washington, DC 20410.

Record source categories:
    Mortgagors, mortgagees, taxing authorities, insurance companies and 
Housing counselors. The mortgagors and mortgagees collect the personal 
information from program participants and enters the information into 
the HUD the Single Family Computerized Home Underwriting Management 
System (CHUMs). The HERMIT system interfaces CHUMS for its information.

Exemption claimed for the system:
[FR Doc. 2012-24927 Filed 10-9-12; 8:45 am]