Supporting Statement A

CONSUMER FINANCIAL PROTECTION BUREAU
INFORMATION COLLECTION REQUEST – SUPPORTING STATEMENT
QUALITATIVE TESTING OF MORTGAGE SERVICING RELATED MODEL
FORMS AND DISCLOSURES
(OMB CONTROL NUMBER: 3170-XXXX)

A.

JUSTIFICATION

1.

CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law No. 111203, Title XIV (Dodd-Frank Act), requires CFPB to publish, in final form, certain
mortgage servicing rules by January 21, 2013. These rules implement sections 1418
(Reset of Hybrid Adjustable Rate Mortgages), 1420 (Periodic Mortgage Loan
Statements) and 1463 (Force-Placed Insurance Disclosures) of the Dodd-Frank Act. The
CFPB has determined that model forms and disclosures are required for these rules.
Dodd-Frank Act §§ 1418, 1420, and 1463.
Through proposed rules published on September 17, 2012 (the 2012 RESPA Mortgage
Servicing Proposal and the 2012 TILA Mortgage Servicing Proposal), the CFPB is
proposing to revise Regulation X to add a number of mortgage servicing requirements
provided for in the Dodd-Frank Act’s amendments to RESPA and TILA, as well as other
requirements the CFPB is proposing to adopt pursuant to authority granted by the DoddFrank Act’s amendments to RESPA.
The CFPB has previously tested certain of these disclosures. For instance, the periodic
statement, the rate adjustment notice, and the force-placed insurance notices were tested
with consumers under an Emergency Clearance previously approved by OMB with the
OMB Control Number 3170-0018.
In addition to the model disclosure proposed to implement the Dodd-Frank Act, the
CFPB is proposing to make adjustments to the Servicing Transfer Statement, which is an
existing model form under Regulation X. The Bureau proposes to amend the model form
to streamline the contents of the form. The Bureau believes that borrowers are best
served by reducing the content of the form so that borrowers receive a form that clearly
sets forth the required content regarding the transfer of servicing and the address to which
the next payment should be sent. In making changes to Regulation X, the Bureau relies
on its authority under sections 6(g), 6(j)(3) and 19(a) of RESPA.
The CFPB is also proposing to revise Regulation X to add a number of mortgage
servicing requirements provided for in the Dodd-Frank Act’s amendments to RESPA.
These revisions would include a requirement that servicers undertake early intervention
with delinquent borrowers. The early intervention provision would require servicers to
send oral and written notices upon a borrower’s reaching certain stages of delinquency.

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The Bureau is proposing these requirements because there is significant risk to consumers
as a result of a delay in communication between delinquent borrowers and servicers
because the longer a borrower remains delinquent, the more difficult it can be to avoid
foreclosure. The Bureau is proposing model clauses for servicers to use in the written
notices they provide to borrowers.
The CFPB received OMB approval of its generic information collection request on
XXXX, 2012. The OMB Control number is 3170-XXXX. As set forth in the Supporting
Statement, the CFPB has been engaged in and plans to continue the qualitative testing of
disclosures and related material relating to the features of consumer financial products
and services.
The CFPB has determined that qualitative testing is necessary to test the effectiveness of
the proposed Servicing Transfer Disclosure and the proposed model clauses related to
early intervention. The CFPB has further determined that the qualitative evaluation of
the forms, as part of the iterative design process, needs to be initiated in October 2012, to
allow for one round of testing prior to issuing a final rule in January 2013. The CFPB
may also decide to conduct an additional round of qualitative testing on the proposed
model forms related to periodic statements, rate adjustment notices for adjustable rate
mortgages, and force-placed insurance. Qualitative testing on these forms was previously
approved by OMB and given an OMB Control Number 3170-0018. Accordingly, this
statement applies to two potential rounds of testing. The first round would involve the
proposed mortgage servicing transfer disclosure and the proposed early intervention
notice model clauses. The second round of testing, which may or may not be conducted
based in part upon the feedback and public comments received by the Bureau regarding
the proposed disclosures could include all or some of the periodic statement, rate
adjustment notice, force-placed insurance disclosure, mortgage servicing transfer
disclosure, and the early intervention model clauses.
As the CFPB previously stated in the Emergency Request it submitted to test mortgage
servicing disclosures, without model forms and disclosures printed in final form by
January 21, 2013, consumers will not gain the benefit of clear, uniform, and tested forms
and disclosures and mortgage servicers will find themselves subject to provisions of the
Dodd-Frank Act without the benefit of model forms or disclosures to help them comply
with their obligations.
Any testing conducted under this individual clearance will only pertain to creation and
evaluation of the mortgage servicing related model forms and disclosures.
2.

USE OF DATA

The data collected will be used to inform the CFPB’s design and development process
and evaluation of the model forms and disclosures. The research will include cognitive
one-on-one think-aloud interviews. Data collection tools will include: consent forms,
brief participant questionnaires, and brief, focused protocols for individual interviews.

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The information collected during qualitative testing of the model forms and disclosures
will inform design and content of the forms. The data (consisting of notes and audio- and
video-recordings from the interviews) will be coded and analyzed by ICF to determine
what elements of the form are effective and what elements need revision. The data will
be shared with the CFPB staff working on the disclosure project to inform their decisions
on revisions to the disclosure form. The testing process will improve the disclosure
forms — in terms of accessibility, content, and/or opportunity to demonstrate
understanding.
Information collected is not meant to be, and will not be treated as, a sample that is
statistically generalizable to the overall American population.
3.

USE OF INFORMATION TECHNOLOGY TO REDUCE BURDEN

The majority of the data collection involves interviews, which will be conducted without
computer assistance. There is no planned use of electronic capture software systems for
qualitative testing.
4.

EFFORTS TO IDENTIFY DUPLICATION

This research does not duplicate any outside-of-government research effort, as its purpose
is not to replicate survey research studies. The research is necessary to design, develop,
and implement model forms and disclosures. CFPB staff working on the project, as well
as staff at CFPB’s contractor, ICF, are cognizant of current research being done in the
field of disclosure design and development. The CFPB will continue to monitor research
on disclosures and related work of researchers and other Federal regulatory agencies to
ensure that the CFPB’s research techniques reflect current knowledge and best practices.
5.

METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER
SMALL ENTITIES

The data collection is not anticipated to burden small entities because all information
collection will occur from individuals.
6.

CONSEQUENCES OF LESS FREQUENT COLLECTION AND OBSTACLES
TO BURDEN REDUCTION

If this information is not collected, it will not be possible to evaluate the effectiveness of
the model forms and disclosures. Each individual will participate only once, so
frequency of data collection is not applicable.
7.

SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE
INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.6

No special circumstances require the collection to be conducted in a manner inconsistent
with the guidelines in 5 CFR 1320.6.

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8.

CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON
AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF
INSTRUCTIONS AND FORMS, AND DATA ELEMENTS

The CFPB has contracted with ICF, a contractor with expertise in disclosure design,
communication, and research. The Bureau will use this expertise in its development of
the mortgage servicing related model forms and disclosures and the administration and
analysis of the qualitative testing.
9.

EXPLANATION OF DECISION TO PROVIDE PAYMENT OR GIFT TO
RESPONDENTS

The research projects are not related to producing statistical estimates. In certain
circumstances, a project’s objectives can be accomplished at lower costs and with greatly
reduced respondent burden by the use of small, purposive samples. For some research
projects, the research team will travel to, and test in, different regions in the country, to
obtain the participation of residents in those locations. Because respondents are asked to
leave their homes and travel to the testing site, they will be reimbursed a designated
amount of money for their time at the site and for transportation. Individual interviews
involve a significant time commitment (60 minutes for the interview, plus travel time).
Further, participants are being asked to undertake difficult tasks. For example,
respondents may be asked to review multiple documents to determine if the documents
provide appropriate information, communicate effectively, and enable consumers to
understand and use the information.
The CFPB intends to schedule approximately twelve interviews per round of consumer
testing. This method is intended to yield at least 8-10 completed one-on-one interviews
per round of testing.
These commitments of time combined with the cognitive burden of tasks related to
financial decisions require that sufficient incentive be provided to participants. ICF will
pay each participant in the cognitive interview for his or her time.
Consistent with the terms of the generic clearance, ICF recruited consumer participants
for prior rounds of qualitative testing on mortgage servicing forms that was previously
approved by OMB and given an OMB Control Number 3170-0018 with a $40 stipend per
consumer participant. But the recruitment efforts showed that consumer were not
responsive to a stipend level of $40. Accordingly, the CFPB is respectfully seeking
approval that ICF be allowed to recruit consumer participants for the purposes of the
consumer testing described in this individual supporting statement with a $65 stipend per
consumer participant. Recruitment efforts in prior rounds of qualitative testing
demonstrated that consumers were responsive to a stipend level of $65.

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10.

ASSURANCE OF PRIVACY OF RESPONSES

The CFPB imposed appropriate privacy requirements in its contract with ICF, to the
extent permitted by applicable laws (as described above). ICF has agreed to comply with
all requirements and restrictions in the contract about information release, non-disclosure
of personal information, privacy, and security.
ICF’s procedures for ensuring participant privacy are documented in its various testing
protocols and procedures and are woven into its testing process. For each testing project
that involves individual participants, they prepare specific participant consent forms.
ICF collects limited personal identifying information (PII), and only as provided for on
consent forms. In subsequent reporting, ICF refers to participants only by number (e.g.,
Round #2, Participant #6). All PII is kept separately and without identifying participant
numbers. ICF keeps consent forms in locked storage and physically separate from other
data to ensure that PII cannot, in any way, be linked to the data collected. The PII will
not be provided to the CFPB.
ICF aggregates the data and reports the results without referencing or disclosing any
identifying PII about the participants. Prior to the submission of deliverables, it reviews
and redacts, where necessary, any personal data and results to protect the identities of the
participants. At the completion of the project, ICF will transfer or destroy all private data
according to the security procedures and requirements specified and approved by the
CFPB.
Additionally, ICF requires all internal staff and any consultants employed (e.g.,
consultants who provide transcription services) to sign privacy forms before their
participation in the project. ICF secures all private data in locked file cabinets and
document archiving and storage in password-protected folders on secure servers. That
information will only be accessible to those individuals employed by ICF who are
approved to work on this project. ICF has shredders on site for destroying any private
draft documents no longer needed and will archive only those copies required to be kept
for record-keeping purposes. Its employees, subcontractors, and subcontract employees
will not disclose any information it obtains or prepares in the course of performance of its
contract to any third party without receiving written permission from the Contracting
Officer. If disclosure of information is required by law or legal process, ICF is required
to contact the Contracting Officer’s Technical Representative and the Contracting Officer
immediately to receive approval prior to release of any information.
11.

JUSTIFICATION OF SENSITIVE QUESTIONS

The most sensitive information expected to be collected in connection with the qualitative
research activities is demographic data about the respondent, such as age range, race,
income, education level and past or present experiences with mortgage loans. This will
be collected voluntarily and is necessary to ensure the CFPB has a sufficient
demographic mix for its purposive sample. Because each participant is identified by a

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number rather than a name, none of this demographic or loan experience data will be tied
in reporting to any specific individual.
12.

ESTIMATED BURDEN OF INFORMATION COLLECTION

Process:

Number of
Respondents

Average burden
per response

Total burden hours

Cognitive ThinkAloud Interviews
Screening
Travel time to sites
TOTAL

24

60 minutes

24

240
24

6 minutes
60 minutes

24
24
72 hours

The estimates are based on the average length of time it took to complete one-on-one
cognitive think-aloud interviews to test mortgage servicing disclosures previously
approved by OMB under Control Number 3170-0018.
13.

ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

There will be no annualized capital or start-up costs for the respondents to collect and
submit this information.
14.

ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

There will be no annualized capital/start-up costs for the government to receive this
information. This testing is funded with non-appropriated funds. It is anticipated that
costs of $31,580 will be incurred for facility rental, recruitment, incentives, and
transcription services.
The Blanket Purchase Agreement, under which this data collection is being conducted,
was awarded through a competitive bidding process.
15.

PROGRAM CHANGES OR ADJUSTMENTS

There were no changes being made to this collection that will result in any change to the
burden previously reported to OMB.
16.

PLANS FOR TABULATION, STATISTICAL ANLAYSIS AND
PUBLICATION

The CFPB anticipates publishing a final testing report explaining the methodology and
discussing the results of the qualitative testing. This report will provide only aggregated
data.

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17.

DISPLAY OF EXPIRATION DATE

The OMB control number and expiration date will be displayed on the data collection
instruments, such as consent forms, participant questionnaires, and interview protocols.
18.

EXCEPTIONS TO THE CERTIFICATION STATEMENT REQUIREMENT

There are no exceptions to the Certification Statement in item 19 of Form 83-I.

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