Mortgagee Review Board
Federal Register: March 28, 2008 (Volume 73, Number 61)
Proposed Rules
Page 16605-16610
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr28mr08-19
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Part 25
Docket No. FR-5082-P-01
RIN 2510-AA01
Mortgagee Review Board
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
SUMMARY: This proposed rule would make changes to the Department's
Mortgagee Review Board (Board) regulations to clarify and better reflect statutory directives and amend current practice. This proposed rule would modify the Board's procedures governing hearings. Additional revisions proposed by this rule would remove provisions that unnecessarily duplicate the authorizing statute and would clarify the authority and duties of the Board in taking administrative action against mortgagees approved by the Federal Housing Administration. This proposed rule would separate and clarify the grounds for administrative action and the factors considered by the Board in evaluating whether to take administrative action, as well as require the mortgagee to address these factors in its response to the Board's notice of violation.
Finally, other organizational changes would be made to improve overall clarity.
DATES: Comment Due Date: May 27, 2008.
ADDRESSES: Interested persons are invited to submit comments regarding this proposed rule to the Regulations Division, Office of General
Counsel, Department of Housing and Urban Development, 451 Seventh
Street, SW., Room 10276, Washington, DC 20410-0500. Communications must refer to the above docket number and title. There are two methods for submitting public comments. All submissions must refer to the above docket number and title. 1. Submission of Comments by Mail. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 10276,
Washington, DC 20410-0001. 2. Electronic Submission of Comments. Interested persons may submit comments electronically through the Federal eRulemaking Portal at www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the www.regulations.gov Web site can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically.
Note: To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule. No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
Public Inspection of Public Comments. All properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at (202) 708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal
Information Relay Service at (800) 877-8339. Copies of all comments submitted are available for inspection and downloading at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Dane Narode, Acting Associate General
Counsel for Program Enforcement, Department of Housing and Urban
Development, 1250 Maryland Avenue, Suite 200, Washington, DC 20024- 0500; telephone number (202) 708-2350 (this is not a toll-free number); e-mail: Dane_M._Narode@hud.gov. Hearing- and speech-impaired persons may access the voice telephone number listed above by calling the toll- free Federal Information Relay Service at 1-(800) 877-8339.
SUPPLEMENTARY INFORMATION:
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Background
The Mortgagee Review Board (Board) oversees the performance of lenders participating in the Federal Housing Administration (FHA) mortgage insurance programs. Section 1708(c) of the National Housing
Act (12 U.S.C. 1708(c)) empowers the Board to initiate the issuance of a letter of reprimand, probation, suspension, or withdrawal of any mortgagee found to be engaging in activities in violation of FHA requirements or the nondiscrimination requirements of the Equal Credit
Opportunity Act (15 U.S.C. 1691 et seq.), the Fair Housing Act (42
U.S.C. 3601 et seq.), or Executive Order 11063, entitled ``Equal opportunity in housing.'' HUD's regulations implementing section 1708(c) are located in 24 CFR part 25. The regulations governing the
Board set forth the authority of the Board; administrative actions available and factors to be considered by the Board in taking such action; violations that give rise to administrative actions; the procedures involved in notifying mortgagees of a violation and administrative action, as well as any hearing that results; and provide for the publication and dissemination of information regarding actions.
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This Proposed Rule
This proposed rule would amend the regulations governing the Board at 24 CFR part 25. This section of the preamble describes the proposed regulatory changes.
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Hearings To Be Conducted by Administrative Law Judges
This proposed rule would permit hearings to be conducted by an
Administrative Law Judge (ALJ). As proposed, hearings would be conducted in accordance with the applicable provisions of 24 CFR part 26, with two modifications identified in the regulatory text. (The regulations codified in 24 CFR part 26 governing hearings that HUD is required to conduct pursuant to the Administrative Procedure Act (5
U.S.C. 551 et seq.) will apply to these matters.) This change would eliminate the procedural delay whereby a matter is referred to a hearing official, who then perfunctorily refers the matter to a hearing officer. HUD is also proposing the removal of the definitions of
``Hearing Official'' and ``Hearing Officer'' from Sec. 25.3, as a conforming change.
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Inclusion of References To Authorizing Statute
Additional revisions proposed by this rule would remove provisions that unnecessarily duplicate the authorizing statute (i.e., 12 U.S.C. 1708), and are designed to clarify the authority and duties of the
Board in taking administrative action against FHA-approved mortgagees.
For example, Sec. 25.5, entitled ``Administrative Actions,'' addresses administrative actions available to the Board against
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those mortgagees that fail to comply with either a directive of a letter of reprimand or a term of probation. Paragraphs (b) and (c) of
Sec. 25.5 would be revised by referencing the statute as the source of actions available to the Board rather than the current reference of part 25.
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Clarifying and Organizational Changes
Section 25.2 would be revised to incorporate Sec. 25.12, as currently designated.
The proposed rule would revise Sec. 25.2, which describes the authority for the establishment of the Board, to incorporate the provisions of current Sec. 25.12, regarding the authority of the Board to impose civil money penalties. Section 25.12 would be removed.
Additionally, the proposed rule would remove the authority to delegate the power to impose administrative sanctions on the grounds specified in paragraphs (e), (h), and (u) of Sec. 25.6 or to take administrative actions for failure to remain in compliance with the requirements for approval in 24 CFR 202.5(i), 202.5(n), 202.7(b)(4), 202.8(b)(1), and 202.8(b)(3). The Department has decided to return this action to the Board, conforming it to the Board's practice regarding sanctions for other violations.
Finally, this proposed rule would remove reference to the delegation of the Board's authority to hold hearings under this part.
This part now specifies that hearings are to be conducted by an
Administrative Law Judge in accordance with the provisions of the
Administrative Procedure Act, 5 U.S.C. 551 et seq. Therefore, the provision authorizing delegation of this authority is no longer necessary.
Section 25.4 would be revised to cite directly to the statute and clarify the title of an advisor.
Section 25.4(a) would be revised to cite to the statute for the identity of the members of the Board. Section 25.4(b) would be revised based on the change in title of one advisor to Director of the Office of Lender Activities and Program Compliance.
Current Sec. 25.9 would be redesignated as new Sec. 25.6.
Section 25.9, entitled ``Violations creating grounds for administrative action,'' would be redesignated as Sec. 25.6 so that the regulations reflect the progression of the administrative process.
In addition to the redesignation, this section would also be revised.
The language of the introductory paragraph has been moved to create a new Sec. 25.8. Redesignated Sec. 25.6(g) would be revised to provide that grounds for administrative action exist if a mortgagee fails to comply with any agreement, certification, undertaking, or condition of approval listed on, or applicable to, either a mortgagee's application for approval or an approved mortgagee's branch office notification.
Redesignated Sec. 25.6(i) would be revised to change the reference from hearing official or officers to Administrative Law Judge to reflect the change in hearing procedures proposed by this rule.
Redesignated Sec. 25.6(j) would be revised to include the violation of an agreement with HUD as creating grounds for administrative action.
Redesignated Sec. 25.6(ff) would be revised to include a catchall provision whereby a violation of FHA requirements that the Board or the
Secretary determines to be so serious creates grounds for administrative action.
Current Sec. 25.6 would be redesignated as new Sec. 25.7.
Section 25.6, entitled ``Notice of violation,'' would be redesignated as Sec. 25.7. This section would also be revised to clarify that proof of delivery of the notice of violation to the mortgagee's address of record establishes that the mortgagee has received the notice. New Sec. 25.7 also would provide that in responding to the notice, mortgagees must address the factors listed in new Sec. 25.8. HUD also proposes to add a provision to this section that would create an exception to the written notice of violation requirement before issuing a letter of reprimand, provided that the
Board has received information that discloses a basis for the issuance of a letter of reprimand.
Addition of a new Sec. 25.8.
This proposed rule would separate and clarify the grounds for administrative action and the factors considered by the Board in evaluating whether to take administrative action under 12 U.S.C. 1708(c). Further, this proposed rule would also require the mortgagee to address these factors in its response to the Board's notice of violation, which would assist in the Board's informed consideration of the factors. This proposed rule would eliminate the existing exception from consideration of the enumerated factors for those cases that are based on a mortgagee's failure to maintain basic threshold eligibility for FHA approval, as set forth in paragraphs (e), (h), and (u) of Sec. 25 (i.e., (e) failure of a nonsupervised mortgagee to submit the required annual audit report of its financial condition prepared in accordance with instructions issued by the Secretary within 90 days of the close of its fiscal year, or such longer period as the Assistant
Secretary of Housing--Federal Housing Commissioner may authorize in writing prior to the expiration of 90 days; (h) failure of an approved mortgagee to meet or maintain the applicable net worth, liquidity, or warehouse line of credit requirements of 24 CFR part 202 pertaining to net worth, liquid assets, and warehouse line of credit or other acceptable funding plan; and (u) failure to pay the application and annual fees required by 24 CFR part 202.) With the removal of the delegation from Sec. 25.2 for these cases, the Board will now consider the mortgagee's response to the Notice of Violation in the same manner as all other cases it considers.
Current Sec. 25.7 is redesignated as new Sec. 25.9.
Section 25.7, entitled ``Notice of administrative action,'' would be redesignated as Sec. 25.9. This section would also be revised to clarify that proof of delivery of a notice of administrative action to the mortgagee's address of record establishes that the mortgagee has received the notice. The section would also be amended to require that in actions for probation, suspension, or withdrawal, the notice must describe the nature and duration of the administrative action, specify the reasons for the action, inform the mortgagee of its right to a hearing, and inform the mortgagee of the time and manner in which to request a hearing.
Current Sec. 25.8 is being redesignated as new Sec. 25.10.
Section 25.8, entitled ``Hearings and hearing request,'' would be redesignated as Sec. 25.10. This section would also be revised to clarify that mortgagees that may be subject to probation, suspension, or withdrawal are entitled to a hearing, but a hearing must be requested. This section would also be revised to reflect the authority of an ALJ to conduct the hearing. As such, former Sec. 25.8(d)(2), entitled ``Referral to a hearing officer or other independent official,'' has been removed. Additionally, the proposed rule would revise the procedural rules governing a hearing. Hearings would be conducted in accordance with the provisions of 24 CFR part 26 governing hearings that are conducted in accordance with the Administrative
Procedure Act, as those provisions are modified by this section.
Current Sec. 25.14 is being redesignated as new Sec. 25.11.
Section 25.14, entitled ``Prohibition against modification of Board orders,'' would be redesignated as new Sec. 25.11. This section would also be revised to reflect that under the proposed rule hearings are to be conducted by ALJs.
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Current Sec. Sec. 25.10, 25.11, and 25.13 are being consolidated into new Sec. 25.12.
Section 25.10, entitled ``Publication in Federal Register of actions,'' Sec. 25.11, entitled ``Notification to other agencies,'' and Sec. 25.13, entitled ``Notifying GNMA of withdrawal actions,'' are being combined and redesignated as Sec. 25.12. In addition to including each of the referenced provisions, Sec. 25.12 would be revised to include a paragraph that provides for the availability of all non-privileged information regarding the nature of the violation and the resolution of the action to the public in cases where the notice of administrative action does not result in a hearing or in any case in which a settlement is entered into by the Board and a mortgagee.
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Small Business Concerns Related to Board Enforcement Actions
With respect to enforcement actions undertaken by the Board against a mortgagee, HUD is cognizant that section 222 of the Small Business
Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (SBREFA) requires the Small Business and Agriculture Regulatory Enforcement
Ombudsman to ``work with each agency with regulatory authority over small businesses to ensure that small business concerns that receive or are subject to an audit, on-site inspection, compliance assistance effort, or other enforcement related communication or contact by agency personnel are provided with a means to comment on the enforcement activity conducted by this personnel.'' To implement this statutory provision, the Small Business Administration has requested that federal agencies include the following language on agency publications and notices that are provided to small business concerns at the time the enforcement action is undertaken. The language is as follows:
Your Comments Are Important
The Small Business and Agriculture Regulatory Enforcement
Ombudsman and 10 Regional Fairness Boards were established to receive comments from small businesses about federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the enforcement actions of
insert agency name
, you will find the necessary comment forms at www.sba.gov/ombudsman or call 1-888-REG-FAIR (1-888-734-3247).
In accordance with its notice describing HUD's actions on the implementation of SBREFA, which was published on May 21, 1998 (63 FR 28214), HUD will provide small entities with information on the
Fairness Boards and National Ombudsman program, at the time enforcement actions are taken, to ensure that small entities have the full means to comment on the enforcement activity conducted by HUD.
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Findings and Certifications
Paperwork Reduction Act
The information collection requirements contained in this rule have been approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB
Control Number 2502-0523. In accordance with the Paperwork Reduction
Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a valid OMB control number.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 605(b)) (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This proposed rule would make changes to HUD's Mortgagee Review Board regulations at 24
CFR part 25 to clarify and better reflect statutory directives and to amend current practice. All entities, small or large, are subject to the same penalties for violations of HUD requirements, as established by statute and implemented by the part 25 regulations. To the extent the rule has any impact on a small entity, it would be a result of the entity's failure to comply with HUD requirements.
Accordingly, the undersigned certifies that this rule will not have a significant economic impact on a substantial number of small entities. Notwithstanding HUD's determination that this rule will not have a significant effect on a substantial number of small entities,
HUD specifically invites comments regarding any less burdensome alternatives to this rule that will meet HUD's objectives, as described in this preamble.
Environmental Impact
This proposed rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate, real property acquisition, disposition, leasing, rehabilitation, alteration, demolition, or new construction, or establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this proposed rule is categorically excluded from environmental review under the National Environmental Policy Act (42 U.S.C. 4321 et seq.).
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has federalism implications and either imposes substantial direct compliance costs on state and local governments and is not required by statute, or preempts state law, unless the relevant requirements of Section 6 of the Executive Order are met. This rule affects only mortgagees and does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive
Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and the private sector. This proposed rule does not impose any federal mandates on any state, local, or tribal government or the private sector within the meaning of UMRA.
List of Subjects in 24 CFR Part 25
Administrative practice and procedure, Loan programs-housing and community development, Organization and functions (Government agencies), Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, HUD proposes to amend 24
CFR part 25 to read as follows:
PART 25--MORTGAGEE REVIEW BOARD 1. The authority citation for 24 CFR part 25 continues to read as follows:
Authority: 12 U.S.C. 1708(c), 1708(d), 1709(s), 1715b, and 1735f-14; 42 U.S.C. 3535(d). 2. Revise Sec. 25.2 to read as follows:
Sec. 25.2 Establishment and authority of Board.
(a) Establishment of the Board. The Mortgagee Review Board (Board) was established in the Federal Housing Administration, which is in the
Office of the Assistant Secretary for Housing--
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Federal Housing Commissioner, by section 202(c)(1) of the National
Housing Act (12 U.S.C. 1708(c)(1)), as added by section 142 of the
Department of Housing and Urban Development Reform Act of 1989 (Pub. L. 101-235, approved December 15, 1989).
(b) Authority of the Board. The Board has the authority to initiate administrative actions against mortgagees and lenders under 12 U.S.C. 1708(c) and shall exercise all of the functions of the Secretary with respect to administrative actions against mortgagees and lenders and such other functions as are provided in this part. The Board shall have all powers necessary and incident to the performance of these functions and such other functions as are provided in this part, except as limited by this part.
(1) Administrative Actions. The Board has the authority to take any administrative action against mortgagees and lenders as provided in 12
U.S.C. 1708(c). The Board may delegate its authority to take all nondiscretionary acts.
(2) Civil Money Penalties. The Board is authorized pursuant to section 536 of the National Housing Act (12 U.S.C. 1735(f)-14) to impose civil money penalties upon mortgagees and lenders, as set forth in 24 CFR part 30. The violations for which a civil money penalty may be imposed are listed in subpart B (Violations) of 24 CFR part 30.
Hearings to challenge the imposition of civil money penalties shall be conducted according to the applicable rules of 24 CFR part 30.
(3) Authorization for other administrative actions. The Board may, in its discretion, approve the initiation of a suspension or debarment action against a mortgagee or lender by any Suspending or Debarring
Official under 24 CFR part 24. 3. In Sec. 25.3, remove the definitions of ``Hearing Official'' and ``Hearing Officer.'' 4. In Sec. 25.4, revise paragraphs (a) and (b) to read as follows:
Sec. 25.4 Operation of the Mortgagee Review Board.
(a) Members. The Board consists of those HUD officials designated to serve on the Board by section 202(c)(2) of the National Housing Act
(12 U.S.C. 1708(c)(2)).
(b) Advisors. The Inspector General or his or her designee, and the
Director of the Office of Lender Activities and Program Compliance (or such other position as may be assigned such duties), and such other persons as the Board may appoint, shall serve as nonvoting advisors to the Board.
* * * * * 5. Revise Sec. 25.5 to read as follows:
Sec. 25.5 Administrative actions.
(a) General. The Board is authorized to take administrative actions in accordance with 12 U.S.C. 1708(c), including, but not limited to, the following: issue a letter of reprimand, probation, suspension, or withdrawal; or enter into a settlement agreement.
(b) Letter of reprimand. A letter of reprimand shall be effective upon receipt of the letter by the mortgagee. Failure to comply with a directive in the letter of reprimand may result in any other administrative action as provided by 12 U.S.C. 1708(c) that the Board finds appropriate.
(c) Probation. Probation shall be effective upon receipt of the notice of probation by the mortgagee. Failure to comply with the terms of probation may result in any other administrative action as provided by 12 U.S.C. 1708(c) that the Board finds appropriate.
(d) Suspension. (1) Effect of suspension. (i) During the period of suspension, HUD will not endorse any mortgage originated by the suspended mortgagee under the Title II program unless prior to the date of suspension:
(A) A firm commitment has been issued relating to any such mortgage; or
(B) A Direct Endorsement underwriter has approved the mortgagor for any such mortgage.
(ii) During the period of suspension, a lender or loan correspondent may not originate new Title I loans under its Title I
Contract of Insurance or apply for a new Contract of Insurance.
(2) Effective date of suspension. A suspension issued pursuant to
Sec. 25.7(d) is effective upon issuance. Any other suspension is effective upon receipt of the notice of suspension by the mortgagee.
(e) Withdrawal. (1) Effect of withdrawal. (i) During the period of withdrawal, HUD will not endorse any mortgage originated by the withdrawn mortgagee under the Title II program, unless prior to the date of withdrawal:
(A) A firm commitment has been issued relating to any such mortgage; or
(B) A Direct Endorsement underwriter has approved the mortgagor for any such mortgage.
(ii) During the period of withdrawal, a lender or loan correspondent may not originate new Title I loans under its Title I
Contract of Insurance or apply for a new Contract of Insurance. The
Board may limit the geographical extent of the withdrawal, or limit its scope (e.g., to either the single family or multifamily activities of a withdrawn mortgagee). Upon the expiration of the period of withdrawal, the mortgagee may file a new application for approval under 24 CFR part 202.
(2) Effective date of withdrawal. (i) If the Board determines that immediate action is in the public interest or in the best interests of the Department, then withdrawal shall be effective upon receipt of the
Board's notice of withdrawal.
(ii) If the Board does not determine that immediate action is necessary according to paragraph (e)(2)(i) of this section, then withdrawal shall be effective either:
(A) Upon the expiration of the 30-day period specified in Sec. 25.10, if the mortgagee has not requested a hearing; or
(B) Upon receipt of the Board's decision under Sec. 25.10, if the mortgagee requests a hearing.
Sec. Sec. 25.10 and 25.11 [Removed] 6. Remove Sec. Sec. 25.10 and 25.11. 7. Redesignate Sec. Sec. 25.6, 25.7, 25.8, and 25.9 as Sec. Sec. 25.7, 25.9, 25.10, and 25.6, respectively. 8. In newly designated Sec. 25.6, revise the section heading, the introductory text, and paragraphs (g), (j), (x), and (ff), to read as follows:
Sec. 25.6 Violations creating grounds for administrative action.
Any administrative action imposed under 12 U.S.C. 1708(c) shall be based upon one or more of the following violations:
* * * * *
(g) Failure to comply with any agreement, certification, undertaking, or condition of approval listed on, or applicable to, either a mortgagee's application for approval or an approved mortgagee's branch office notification;
* * * * *
(j) Violation of the requirements of any contract or agreement with the Department, or violation of the requirements set forth in any statute, regulation, handbook, mortgagee letter, or other written rule or instruction;
* * * * *
(x) Failure to submit a report required under 24 CFR 202.12(c) within the time determined by the Commissioner, or to commence or complete a plan for corrective action under that section within the time agreed upon with the Commissioner.
* * * * *
(ff) Any other violation of Federal Housing Administration requirements that the Board or the Secretary determines to be so serious as to justify an administrative sanction.
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9. Revise newly designated Sec. 25.7, to read as follows:
Sec. 25.7 Notice of violation.
(a) General. The Chairperson of the Board, or the Chairperson's designee, shall issue a written notice to the mortgagee at the mortgagee's address of record at least 30 days prior to taking any action under 12 U.S.C. 1708(c) against the mortgagee. Proof of delivery to the mortgagee's address of record shall establish the mortgagee's receipt of the notice. The notice shall state the specific violations that have been alleged, and shall direct the mortgagee to reply in writing to the Board within 30 days after receipt of the notice by the mortgagee. The notice shall also provide the address to which the response shall be sent. If the mortgagee fails to reply during such time period, the Board may make a determination without considering any comments of the mortgagee.
(b) Mortgagee's response. The mortgagee's response to the Board shall be in a format prescribed by the Secretary and shall not exceed 15 double-spaced typewritten pages. The response shall include an executive summary, a statement of the facts surrounding the matter, an argument, and a conclusion. Such response shall also address the factors listed in Sec. 25.8. A more lengthy submission, including documents and other exhibits, may be simultaneously submitted to Board staff for review.
(c) Exception for letter of reprimand. Whenever information comes before the Board that discloses a basis for the issuance of a letter of reprimand, the Board may issue the letter without having previously issued a notice of violation.
(d) Exception for immediate suspension. If the Board determines that there exists adequate evidence that immediate action is required to protect the financial interests of the Department or the public, the
Board may take a suspension action without having previously issued a notice of violation. 10. Add Sec. 25.8, to read as follows:
Sec. 25.8 Factors considered in taking administrative action.
In determining which administrative action under 12 U.S.C. 1708(c), if any, should be taken, the Board will consider, among other factors, the seriousness and extent of the violations, the degree of mortgagee responsibility for the occurrences, and any other mitigating or aggravating facts. Where the Board is considering the taking of a withdrawal action, the Board will also consider whether the violations were egregious or willful in order to determine whether a permanent withdrawal is mandated by 12 U.S.C. 1708(c). 11. Revise newly designated Sec. 25.9 to read as follows:
Sec. 25.9 Notice of administrative action.
(a) Whenever the Board decides to take an action in accordance with 12 U.S.C. 1708(c)(3), the Chairperson of the Board, or the
Chairperson's designee, shall issue a written notice of the action to the mortgagee at the mortgagee's address of record of the determination. Proof of delivery to the mortgagee's address of record shall establish the mortgagee's receipt of the notice.
(b) In actions for probation, suspension, or withdrawal, the notice shall describe the nature and duration of the administrative action, and shall specifically state the reasons for the action. In actions for probation, suspension, or withdrawal, the notice shall inform the mortgagee of its right to a hearing, pursuant to Sec. 25.10, regarding the administrative action and of the manner and time in which to request a hearing. 12. Revise newly designated Sec. 25.10 to read as follows:
Sec. 25.10 Hearings and hearing request.
(a) Hearing request. A mortgagee subject to administrative action under 12 U.S.C. 1708(c) (except for a letter of reprimand) is entitled to a hearing, which, when requested, shall be held on the record. The mortgagee shall submit its request for a hearing within 30 days of receiving the Board's notice of administrative action. The request shall be addressed to the Mortgagee Review Board Docket Clerk,
Department of Housing and Urban Development, 451 Seventh Street, SW.,
Washington, DC 20410. The request shall specifically respond to the violations set forth in the notice of administrative action. If the mortgagee fails to request a hearing within 30 days after receiving the notice of administrative action, the Board's action shall become final.
(b) Hearing by Administrative Law Judge. Hearings are to be conducted by an Administrative Law Judge (ALJ), as set forth in this part. The ALJ shall commence a de novo hearing within 30 days of HUD's receipt of the mortgagee's request, unless the parties agree to an extension. The ALJ may extend this time period for good cause.
(c) Procedural rules. The hearing shall be conducted in accordance with the applicable provisions of 24 CFR part 26, with the following modifications:
(1) The mortgagee or its representative shall be afforded an opportunity to appear, submit documentary evidence, present witnesses, and confront any witness the agency presents, except that the parties shall not be allowed to present members of the Board as witnesses.
(2) Discovery of information and/or documents that do not pertain to the appealing mortgagee, including, but not limited to, reviews or audits by the Department or administrative actions by the Board against mortgagees other than the appealing mortgagee, shall not be permitted.
Members of the Board shall not be subject to deposition.
(3) The hearing shall generally be held in Washington, DC. However, upon a showing of undue hardship or other cause, the ALJ may, in his or her discretion, order the hearing to be held in a location other than
Washington, DC. 13. Revise Sec. 25.12 to read as follows:
Sec. 25.12 Public access to information; Publication of actions.
(a) Where a notice of administrative action does not result in a hearing and in any cases in which a settlement is entered into by the
Board and a mortgagee, all non-privileged information regarding the nature of the violation and the resolution of the action shall be available to the public.
(b) Publication in the Federal Register. The Secretary shall publish, in the Federal Register, a description of and the cause for each administrative action taken by the Board against a mortgagee.
(c) Notification of other agencies. Whenever the Board has taken any discretionary action to suspend and/or withdraw the approval of a mortgagee, the Secretary shall provide prompt notice of the action and a statement of the reasons for the action to the Secretary of Veterans
Affairs; the chief executive officer of the Federal National Mortgage
Association; the chief executive officer of the Federal Home Loan
Mortgage Corporation; the Administrator of the Rural Housing Service
(formerly the Farmers Home Administration); the Comptroller of the
Currency, if the mortgagee is a National Bank or District Bank or subsidiary or affiliate of such a bank; the Board of Governors of the
Federal Reserve System, if the mortgagee is a state bank that is a member of the Federal Reserve System or a subsidiary or affiliate of such a bank, or a bank holding company or a subsidiary or affiliate of such a company; the Board of Directors of the Federal Deposit Insurance
Corporation, if the mortgagee is a state bank that is not a member of the Federal Reserve System, or is a subsidiary or affiliate of such a bank; and the Director of the
Page 16610
Office of Thrift Supervision, if the mortgagee is a federal or state savings association or a subsidiary or affiliate of a savings association.
(d) Notification to GNMA of withdrawal actions. Whenever the Board issues a notice of violation that could lead to withdrawal of a mortgagee's approval, or is notified by GNMA of an action that could lead to withdrawal of GNMA approval, the Board shall proceed in accordance with 12 U.S.C. 1708(d).
Sec. 25.13 [Removed] 14. Section 25.13 is removed. 15. Section 25.14 is redesignated as Sec. 25.11 and is revised to read as follows:
Sec. 25.11 Prohibition against modification of Board orders.
No ALJ before whom proceedings are conducted under Sec. 25.10 shall modify or otherwise disturb in any way an order or notice by the
Board until the hearing under Sec. 25.10 has been concluded. Any order issued by the presiding ALJ following the conclusion of the hearing under Sec. 25.10 shall not become effective until all administrative appeals have been exhausted. 16. Redesignate Sec. 25.15 as Sec. 25.13.
Dated: February 26, 2008.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner .
FR Doc. E8-6323 Filed 3-27-08; 8:45 am
BILLING CODE 4210-67-P
