12 U.S.C. § 1708 : US Code - Section 1708: Federal Housing Administration operations

Search 12 U.S.C. § 1708 : US Code - Section 1708: Federal Housing Administration operations

(a) Mutual Mortgage Insurance Fund
There is created a Mutual Mortgage Insurance Fund (hereinafter
referred to as the "Fund"), which shall be used by the Secretary as
a revolving fund for carrying out the provisions of this subchapter
with respect to mortgages insured under section 1709 of this title
as hereinafter provided, and there shall be allocated immediately
to such Fund the sum of $10,000,000 out of funds made available to
the Secretary for the purposes of this subchapter.
(b) Advisory Board
There is created a Federal Housing Administration Advisory Board
("Board") that shall review operation of the Federal Housing
Administration, including the activities of the Mortgagee Review
Board, and shall provide advice to the Federal Housing Commissioner
with respect to the formulation of general policies of the Federal
Housing Administration and such other matters as the Federal
Housing Commissioner may deem appropriate. The Advisory Board
shall, in all other respects, be subject to the provisions of the
Federal Advisory Committee Act.
(1) The Advisory Board shall be composed of 15 members to be
appointed from among individuals who have substantial expertise
and broad experience in housing and mortgage lending of whom -
(A) 9 shall be appointed by the Secretary;
(B) 3 shall be appointed by the Chairman and Ranking Minority
Member of the Subcommittee on Housing and Urban Affairs of the
Committee on Banking, Housing, and Urban Affairs of the Senate;
and
(C) 3 shall be appointed by the Chairman and Ranking Minority
Member of the Subcommittee on Housing and Community Development
of the Committee on Banking, Finance and Urban Affairs of the
House of Representatives.
(2) Membership on the Advisory Board shall include -
(A) not less than 4 persons with distinguished private sector
careers in housing finance, lending, management, development or
insurance;
(B) not less than 4 persons with outstanding reputations as
licensed actuaries, experts in actuarial science, or economics
related to housing;
(C) not less than 4 persons with backgrounds of leadership in
representing the interests of housing consumers;
(D) not less than 1 person with significant experience and a
distinguished reputation for work in the enforcement, advocacy,
or development of fair housing or civil rights legislation; and
(E) not less than 1 person with a background of leadership
representing rural housing interests.
(3) Members of the Advisory Board shall be selected to ensure,
to the greatest extent practicable, geographical representation
or every region of the country.
(4) Not more than 8 members of the Advisory Board may be from
any one political party.
(5) Membership of the Advisory Board shall not include any
person who, during the previous 24-month period, was required to
register with the Secretary under section 3537b(c) (!1) of title
42 or employed a person for purposes that required such person to
so register.
(6) Of the members of the Advisory Board first appointed, 5
shall have terms of l year, and 5 shall have terms of 2 years.
Their successors and all other appointees shall have terms of 3
years.
(7) The Advisory Board is empowered to confer with, request
information of, and make recommendations to the Federal Housing
Commissioner. The Commissioner shall promptly provide the
Advisory Board with such information as the Board determines to
be necessary to carry out its review of the activities and
policies of the Federal Housing Administration.
(8) The Board shall, not later than December 31 of each year,
submit to the Secretary and the Congress a report of its
assessment of the activities of the Federal Housing
Administration, including the soundness of underwriting
procedures, the adequacy of information systems, the
appropriateness of staffing patterns, the effectiveness of the
Mortgagee Review Board, and other matters related to the Federal
Housing Administration's ability to serve the nation's homebuyers
and renters. Such report shall contain the Board's
recommendations for improvement and include any minority views.
(9) The Board shall meet in Washington, D.C., not less than
twice annually, or more frequently if requested by the Federal
Housing Commissioner or a majority of the members. The Board
shall elect a chair, vice-chair and secretary and adopt methods
of procedure. The Board may establish committees and
subcommittees as needed.
(10) Subject to the provisions of Section 7 of the Federal
Advisory Committee Act, all members of the Board may be
compensated and shall be entitled to reimbursement from the
Department for traveling expenses incurred in attendance at
meetings of the Board.
(11) The Board shall terminate on January 1, 1995.
(c) Mortgagee Review Board
(1) Establishment
There is established within the Federal Housing Administration
the Mortgagee Review Board ("Board"). The Board is empowered to
initiate the issuance of a letter of reprimand, the probation,
suspension or withdrawal of any mortgagee found to be engaging in
activities in violation of Federal Housing Administration
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.
(2) Composition
The Board shall consist of -
(A) the Assistant Secretary of Housing/Federal Housing
Commissioner;
(B) the General Counsel of the Department;
(C) the President of the Government National Mortgage
Association;
(D) the Assistant Secretary for Administration;
(E) the Assistant Secretary for Fair Housing Enforcement (in
cases involving violations of nondiscrimination requirements);
(F) the Chief Financial Officer of the Department; and
(G) the Director of the Enforcement Center; or their
designees.
(3) Actions authorized
When any report, audit, investigation, or other information
before the Board discloses that a basis for an administrative
action against a mortgagee exists, the Board shall take one of
the following administrative actions:
(A) Letter of reprimand
The Board may issue a letter of reprimand only once to a
mortgagee without taking action under subparagraphs (!2) (B),
(C), or (D) of this section. A letter of reprimand shall
explain the violation and describe actions the mortgagee should
take to correct the violation.
(B) Probation
The Board may place a mortgagee on probation for a specified
period of time not to exceed 6 months for the purpose of
evaluating the mortgagee's compliance with Federal Housing
Administration requirements, the Equal Credit Opportunity Act
[15 U.S.C. 1691 et seq.], the Fair Housing Act [42 U.S.C. 3601
et seq.], Executive Order 11063, or orders of the Board. During
the probation period, the Board may impose reasonable
additional requirements on a mortgagee including supervision of
the mortgagee's activities by the Federal Housing
Administration, periodic reporting to the Federal Housing
Commissioner, or submission to Federal Housing Administration
audits of internal financial statements, audits by an
independent certified public accountant or other audits.
(C) Suspension
The Board may issue an order temporarily suspending a
mortgagee's approval for doing business with the Federal
Housing Administration if (i) there exists adequate evidence of
a violation or violations and (ii) continuation of the
mortgagee's approval, pending or at the completion of any
audit, investigation, or other review, or such administrative
or other legal proceedings as may ensue, would not be in the
public interest or in the best interests of the Department.
Notwithstanding paragraph (4)(A), a suspension shall be
effective upon issuance by the Board 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. A suspension shall last for not less than 6
months, and for not longer than 1 year. The Board may extend
the suspension for an additional 6 months if it determines the
extension is in the public interest. If the Board and the
mortgagee agree, these time limits may be extended. During the
period of suspension, the Federal Housing Administration shall
not commit to insure any mortgage originated by the suspended
mortgagee.
(D) Withdrawal
The Board may issue an order withdrawing a mortgagee if the
Board has made a determination of a serious violation or
repeated violations by the mortgagee. The Board shall determine
the terms of such withdrawal, but the term shall be not less
than 1 year. Where the Board has determined that the violation
is egregious or willful, the withdrawal shall be permanent.
(E) Settlements
The Board may at any time enter into a settlement agreement
with a mortgagee to resolve any outstanding grounds for an
action. Agreements may include provisions such as -
(i) cessation of any violation;
(ii) correction or mitigation of the effects of any
violation;
(iii) repayment of any sums of money wrongfully or
incorrectly paid to the mortgagee by a mortgagor, by a seller
or by the Federal Housing Administration;
(iv) actions to collect sums of money wrongfully or
incorrectly paid by the mortgagee to a third party;
(v) indemnification of the Federal Housing Administration
for mortgage insurance claims on mortgages originated in
violation of Federal Housing Administration requirements;
(vi) modification of the length of the penalty imposed; or
(vii) implementation of other corrective measures
acceptable to the Secretary.
Material failure to comply with the provisions of a settlement
agreement shall be sufficient cause for suspension or
withdrawal.
(4) Notice and hearing
(A) The Board shall issue a written notice to the mortgagee at
least 30 days prior to taking any action against the mortgagee
under subparagraph (B), (C), or (D) of paragraph (3). The notice
shall state the specific violations which have been alleged, and
shall direct the mortgagee to reply in writing to the Board
within 30 days. If the mortgagee fails to reply during such
period, the Board may make a determination without considering
any comments of the mortgagee.
(B) If the Board takes action against a mortgagee under
subparagraph (B), (C), or (D) of paragraph (3), the Board shall
promptly notify the mortgagee in writing of the nature, duration,
and specific reasons for the action. If, within 30 days of
receiving the notice, the mortgagee requests a hearing, the Board
shall hold a hearing on the record regarding the violations
within 30 days of receiving the request. If a mortgagee fails to
request a hearing within such 30-day period, the right of the
mortgagee to a hearing shall be considered waived.
(C) In any case in which the notification of the Board does not
result in a hearing (including any settlement by the Board and a
mortgagee), any information regarding the nature of the violation
and the resolution of the action shall be available to the
public.
(5) Publication
The Secretary shall establish and publish in the Federal
Register a description of and the cause for administrative action
against a mortgagee.
(6) Cease-and-desist orders
(A) Whenever the Secretary, upon request of the Mortgagee
Review Board, determines that there is reasonable cause to
believe that a mortgagee is violating, has violated, or is about
to violate, a law, rule or regulation or any condition imposed in
writing by the Secretary or the Board, and that such violation
could result in significant cost to the Federal Government or the
public, the Secretary may issue a temporary order requiring the
mortgagee to cease and desist from any such violation and to take
affirmative action to prevent such violation or a continuation of
such violation pending completion of proceedings of the Board
with respect to such violation. Such order shall include a notice
of charges in respect thereof and shall become effective upon
service to the mortgagee. Such order shall remain effective and
enforceable for a period not to exceed 30 days pending the
completion of proceedings of the Board with respect to such
violation, unless such order is set aside, limited, or suspended
by a court in proceedings authorized by subparagraph (B) of this
paragraph. The Board shall provide the mortgagee an opportunity
for a hearing on the record, as soon as practicable but not later
than 20 days after the temporary cease-and-desist order has been
served.
(B) Within 10 days after the mortgagee has been served with a
temporary cease-and-desist order, the mortgagee may apply to the
United States district court for the judicial district in which
the home office of the mortgagee is located, or the United States
District Court for the District of Columbia, for an injunction
setting aside, limiting of suspending the enforcement, operation,
or effectiveness of such order pending the completion of the
administrative proceedings pursuant to the notice of charges
served upon the mortgagee, and such court shall have jurisdiction
to issue such injunction.
(C) In the case of violation or threatened violation of, or
failure to obey, a temporary cease-and-desist order issued
pursuant to this paragraph, the Secretary may apply to the United
States district court, or the United States court of any
territory, within the jurisdiction of which the home office of
the mortgagee is located, for an injunction to enforce such
order, and, if the court shall determine that there has been such
violation or threatened violation or failure to obey, it shall be
the duty of the court to issue such injunction.
(7) "Mortgagee" defined
For purposes of this subsection, the term "mortgagee" means -
(A) a mortgagee approved under this chapter;
(B) a lender or a loan correspondent approved under
subchapter I of this chapter;
(C) a branch office or subsidiary of the mortgagee, lender,
or loan correspondent; or
(D) a director, officer, employee, agent, or other person
participating in the conduct of the affairs of the mortgagee,
lender, or loan correspondent.
(8) Report required
The Board, in consultation with the Federal Housing
Administration Advisory Board, shall annually recommend to the
Secretary such amendments to statute or regulation as the Board
determines to be appropriate to ensure the long term financial
strength of the Federal Housing Administration fund and the
adequate support for home mortgage credit.
(d) Coordination of GNMA and FHA withdrawal action
(1) Whenever the Federal Housing Administration or Government
National Mortgage Association initiates proceedings that could lead
to withdrawing the mortgagee from participating in the program, the
initiating agency shall -
(A) within 24 hours notify the other agency in writing of the
action taken;
(B) provide to the other agency the factual basis for the
action taken; and
(C) if a mortgagee is withdrawn, publish its decision in the
Federal Register.
(2) Within 60 days of receipt of a notification of action that
could lead to withdrawal under subsection (!3) (1), the Federal
Housing Administration or the Government National Mortgage
Association shall -
(A) conduct and complete its own investigation;
(B) provide written notification to the other agency of its
decision, including the factual basis for its decision; and
(C) if a mortgagee is withdrawn, publish its decision in the
Federal Register.
(e) Appraisal standards
(1) The Secretary shall prescribe standards for the appraisal of
all property to be insured by the Federal Housing Administration.
Such appraisals shall be performed in accordance with uniform
standards, by individuals who have demonstrated competence and
whose professional conduct is subject to effective supervision.
These standards shall require at a minimum -
(A) that the appraisals of properties to be insured by the
Federal Housing Administration shall be performed in accordance
with generally accepted appraisal standards, such as the
appraisal standards promulgated by the Appraisal Foundation a not-
for-profit corporation established on November 30, 1987 under
the laws of Illinois; and
(B) that each appraisal be a written statement used in
connection with a real estate transaction that is independently
an (!4) impartially prepared by a licensed or certified appraiser
setting forth an opinion of defined value of an adequately
described property as of a specific date, supported by
presentation and analysis of relevant market information.
(2) The Appraisal Subcommittee of the Federal Financial
Institutions Examination Council shall include the Secretary or his
designee.
(3) Direct Endorsement Program. -
(A) Any mortgagee that is authorized by the Secretary to
process mortgages as a direct endorsement mortgagee (pursuant to
the single-family home mortgage direct endorsement program
established by the Secretary) may contract with an appraiser
chosen at the discretion of the mortgagee for the performance of
appraisals in connection with such mortgages. Such appraisers may
include appraisal companies organized as corporations,
partnerships, or sole proprietorships.
(B) Any appraisal conducted pursuant to subparagraph (A) shall
be conducted by an individual who complies with the
qualifications or standards for appraisers established by the
Secretary pursuant to this subsection.
(C) In conducting an appraisal, such individual may utilize the
assistance of others, who shall be under the direct supervision
of the individual responsible for the appraisal. The individual
responsible for the appraisal shall personally approve and sign
any appraisal report.
(4) Fee Panel Appraisers. -
(A) Any individual who is an employee of an appraisal company
(including any company organized as a corporation, partnership,
or sole proprietorship) and who meets the qualifications or
standards for appraisers and inclusion on appraiser fee panels
established by the Secretary, shall be eligible for assignment to
conduct appraisals for mortgages under this subchapter in the
same manner and on the same basis as other approved appraisers.
(B) With respect to any employee of an appraisal company
described in subparagraph (A) who is offered an appraisal
assignment in connection with a mortgage under this subchapter,
the person utilizing the appraiser may contract directly with the
appraisal company employing the appraiser for the furnishing of
the appraisal services.