View all text of Subchapter V [§ 1731 - § 1735h]
§ 1735f–14. Civil money penalties against mortgagees, lenders, and other participants in FHA programs
(a) In general
(1) Authority
(2) Amount of penalty
(b) Violations for which a penalty may be imposed
(1) ViolationsThe Secretary may impose a civil money penalty under subsection (a) for any knowing and material violation by a mortgagee or lender or any of its owners, officers, or directors, as follows:
(A) Except where expressly permitted by statute, regulation, or contract approved by the Secretary, transfer of a mortgage insured under this chapter to a mortgagee not approved by the Secretary, or transfer of a loan to a transferee that is not holding a contract of insurance under subchapter I of this chapter.
(B) Failure of a nonsupervised mortgagee, as defined by the Secretary—
(i) to segregate all escrow funds received from a mortgagor for ground rents, taxes, assessments, and insurance premiums; or
(ii) to deposit these funds in a special account with a depository institution whose accounts are insured by the Federal Deposit Insurance Corporation through the Deposit Insurance Fund, or by the National Credit Union Administration.
(C) Use of escrow funds for any purpose other than that for which they were received.
(D) Submission to the Secretary of information that was false, in connection with any mortgage insured under this chapter, or any loan that is covered by a contract of insurance under subchapter I of this chapter.
(E) With respect to an officer, director, principal, or employee—
(i) hiring such an individual whose duties will involve, directly or indirectly, programs administered by the Secretary, while that person was under suspension or withdrawal by the Secretary; or
(ii) retaining in employment such an individual who continues to be involved, directly or indirectly, in programs administered by the Secretary, while that person was under suspension or withdrawal by the Secretary.
(F) Falsely certifying to the Secretary or submitting to the Secretary a false certification by another person or entity.
(G) Failure to comply with an agreement, certification, or condition of approval set forth on, or applicable to—
(i) the application of a mortgagee or lender for approval by the Secretary; or
(ii) the notification by a mortgagee or lender to the Secretary concerning establishment of a branch office.
(H) Violation of any provisions of subchapter I or II of this chapter, or any implementing regulation, handbook, or mortgagee letter that is issued under this chapter.
(I) Failure to engage in loss mitigation actions as provided in section 1715u(a) of this title.
(J) Failure to perform a required physical inspection of the mortgaged property.
(K) Violation of section 1708(d) of this title.
(L) Use of “Federal Housing Administration”, “Department of Housing and Urban Development”, “Government National Mortgage Association”, “Ginnie Mae”, the acronyms “HUD”, “FHA”, or “GNMA”, or any official seal or logo of the Department of Housing and Urban Development, except as authorized by the Secretary.
(2) Additional violationsThe Secretary may impose a civil money penalty under subsection (a) for any knowing and material violation by a principal, officer, or employee of a mortgagee or lender, or other participants in either an insured mortgage or subchapter I loan transaction under this chapter or provision of assistance to the borrower in connection with any such loan, including sellers of the real estate involved, borrowers, closing agents, title companies, real estate agents, mortgage brokers, appraisers, loan correspondents, and dealers for—
(A) submission to the Secretary of information that was false, in connection with any mortgage insured under this chapter, or any loan that is covered by a contract of insurance under subchapter I of this chapter;
(B) falsely certifying to the Secretary or submitting to the Secretary a false certification by another person or entity;
(C) failure by a loan correspondent or dealer to submit to the Secretary information which is required by regulations or directives in connection with any loan that is covered by a contract of insurance under subchapter I; or
(D) causing or participating in any of the violations set forth in paragraph (1) of this subsection.
(3) Prohibition against misleading use of Federal entity designation
(c) Agency procedures
(1) EstablishmentThe Secretary shall establish standards and procedures governing the imposition of civil money penalties under subsection (a). These standards and procedures—
(A) shall provide for the Secretary to make the determination to impose the penalty or to use an administrative entity (such as the Mortgagee Review Board, established pursuant to section 1708(c) of this title) to make the determination;
(B) shall provide for the imposition of a penalty only after the mortgagee or lender or such other person or entity has been given an opportunity for a hearing on the record; and
(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from a hearing.
(2) Final orders
(3) Factors in determining amount of penalty
(4) Reviewability of imposition of penalty
(d) Judicial review of agency determination
(1) In general
(2) Objections not raised in hearing
(3) Scope of review
(4) Order to pay penalty
(e) Action to collect penalty
(f) Settlement by Secretary
(g) “Knowingly” defined
(h) Regulations
(i) Deposit of penalties in insurance funds
(June 27, 1934, ch. 847, title V, § 536, as added Pub. L. 101–235, title I, § 107(a), Dec. 15, 1989, 103 Stat. 2000; amended Pub. L. 104–208, div. A, title II, § 2704(d)(13)(B), Sept. 30, 1996, 110 Stat. 3009–490; Pub. L. 105–65, title V, § 553, Oct. 27, 1997, 111 Stat. 1413; Pub. L. 105–276, title VI, § 601(g), (h), Oct. 21, 1998, 112 Stat. 2674; Pub. L. 108–447, div. I, title II, § 219(a), Dec. 8, 2004, 118 Stat. 3319; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 9(f)(2), Feb. 15, 2006, 119 Stat. 3618; Pub. L. 111–22, div. A, title II, § 203(f), May 20, 2009, 123 Stat. 1647.)