12 U.S.C. § 1723i : US Code - Section 1723I: Civil money penalties against issuers

Search 12 U.S.C. § 1723i : US Code - Section 1723I: Civil money penalties against issuers

(a) In general
(1) Authority
Whenever an issuer or custodian approved under section 1721(g)
of this title knowingly and materially violates any provisions of
subsection (b) of this section, the Secretary of Housing and
Urban Development may impose a civil money penalty on the issuer
or the custodian in accordance with the provisions of this
section. The penalty shall be in addition to any other available
civil remedy or any available criminal penalty and may be imposed
whether or not the Secretary imposes other administrative
sanctions.
(2) Amount of penalty
The amount of the penalty, as determined by the Secretary, may
not exceed $5,000 for each violation, except that the maximum
penalty for all violations by a particular issuer or custodian
during any one-year period shall not exceed $1,000,000. Each
violation of a provision of subsection (b)(1) of this section
shall constitute a separate violation with respect to each pool
of mortgages. In the case of a continuing violation, as
determined by the Secretary, each day shall constitute a separate
violation.
(b) Violations for which penalty may be imposed
(1) Violations
The violations by an issuer or a custodian for which the
Secretary may impose a civil money penalty under subsection (a)
of this section are the following:
(A) Failure to make timely payments of principal and interest
to holders of securities guaranteed under section 1721(g) of
this title.
(B) Failure to segregate cash flow from pooled mortgages or
to deposit either principal and interest funds or escrow funds
into special accounts with a depository institution whose
accounts are insured by the National Credit Union
Administration or by the Federal Deposit Insurance Corporation
through the Deposit Insurance Fund.
(C) Use of escrow funds for any purpose other than that for
which they were received.
(D) Transfer of servicing for a pool of mortgages to an
issuer not approved under this subchapter, unless expressly
permitted by statute, regulation, or contract approved by the
Secretary.
(E) Failure to maintain a minimum net worth in accordance
with requirements prescribed by the Association;
(F) Failure to promptly notify the Association in writing of
any changes that materially affect the business status of an
issuer.
(G) Submission to the Association of false information in
connection with any securities guaranteed, or mortgages pooled,
under section 1721(g) of this title.
(H) Hiring, or retaining in employment, an officer, director,
principal, or employee whose duties involve, directly or
indirectly, programs administered by the Association while such
person was under suspension or debarment by the Secretary.
(I) Submission to the Association of a false certification
either on its own behalf or on behalf of another person or
entity.
(J) Failure to comply with an agreement, certification, or
condition of approval set forth on, or applicable to, the
application for approval as an issuer of securities under
section 1721(g) of this title.
(K) Violation of any provisions of this subchapter or any
implementing regulation, handbook, or participant letter issued
under authority of this subchapter.
(2) Notification to Attorney General
Before taking action to impose a civil money penalty for a
violation under paragraph (1)(G) or paragraph (1)(I), the
Secretary shall inform the Attorney General of the United States.
(c) Agency procedures
(1) Establishment
The Secretary shall establish standards and procedures
governing the imposition of civil money penalties under
subsection (a) of this section. The standards and procedures -
(A) shall provide for the Secretary to make the determination
to impose the penalty;
(B) shall provide for the imposition of a penalty only after
an issuer or a custodian has been given notice of, and
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
If no hearing is requested within 15 days of receipt of a
notice of opportunity for hearing, the imposition of a penalty
shall constitute a final and unappealable determination. If the
Secretary reviews the determination or order, the Secretary may
affirm, modify, or reverse that determination or order. If the
Secretary does not review the determination or order within 90
days of the issuance of the determination or order, the
determination or order shall be final.
(3) Factors in determining amount of penalty
In determining the amount of a penalty under subsection (a) of
this section, consideration shall be given to such factors as the
gravity of the offense, any history of prior offenses (including
offenses occurring before December 15, 1989), ability to pay the
penalty, injury to the public, benefits received, deterrence of
future violations, and such other factors as the Secretary may
determine by regulations.
(4) Reviewability of imposition of penalty
The Secretary's determination or order imposing a penalty under
subsection (a) of this section shall not be subject to review,
except as provided in subsection (d) of this section.
(d) Judicial review of agency determination
(1) In general
After exhausting all administrative remedies established by the
Secretary under subsection (c)(1) of this section, an issuer or a
custodian against which the Secretary has imposed a civil money
penalty under subsection (a) of this section may obtain a review
of the penalty and such ancillary issues as may be addressed in
the notice provided under subsection (c)(1)(A) of this section in
the appropriate court of appeals of the United States, by filing
in such court, within 20 days after the entry of such order or
determination, a written petition praying that the Secretary's
order or determination be modified or be set aside in whole or in
part.
(2) Objections not raised in hearing
A court shall not consider any objection that was not raised in
the hearing conducted pursuant to subsection (c)(1) of this
section unless a demonstration is made of extraordinary
circumstances causing the failure to raise the objection. If any
party demonstrates to the satisfaction of the court that
additional evidence, which was not presented at such hearing, is
material and that there were reasonable grounds for the failure
to present such evidence at the hearing, the court shall remand
the matter to the Secretary for consideration of such additional
evidence.
(3) Scope of review
The decisions, findings, and determinations of the Secretary
shall be reviewed pursuant to section 706 of title 5.
(4) Order to pay penalty
Notwithstanding any other provision of law, the court shall
have the power in any such review to order payment of the penalty
imposed by the Secretary.
(e) Action to collect penalty
If any issuer or custodian fails to comply with the Secretary's
determination or order imposing a civil money penalty under
subsection (a) of this section, after the determination or order is
no longer subject to review as provided by subsections (c)(1) and
(d) of this section, the Secretary may request the Attorney General
of the United States to bring an action in an appropriate United
States district court to obtain a monetary judgment against the
issuer or custodian and such other relief as may be available. The
monetary judgment may, in the discretion of the court, include any
attorneys fees and other expenses incurred by the United States in
connection with the action. In an action under this subsection, the
validity and appropriateness of the Secretary's determination or
order imposing the penalty shall not be subject to review.
(f) Settlement by Secretary
The Secretary may compromise, modify, or remit any civil money
penalty which may be, or has been, imposed under this section.
(g) "Knowingly" defined
The term "knowingly" means having actual knowledge of or acting
with deliberate ignorance of or reckless disregard for the
prohibitions under this section.
(h) Regulations
The Secretary shall issue such regulations as the Secretary deems
appropriate to implement this section.
(i) Deposit of penalties
The Secretary shall deposit all civil money penalties collected
under this section into moneys of the Association pursuant to
section 1722 of this title.