FHA Single Family Housing Policy Handbook 4000.1, Part V — a. Actions and Sanctions (09/14/2015)

FHA Single Family Housing Policy Handbook 4000.1, Part V — a. Actions and Sanctions (09/14/2015)

a. Actions and Sanctions (09/14/2015) The following actions and sanctions may be imposed by the MRB: • a letter of reprimand; • probation; • suspension; • withdrawal of FHA approval; and • civil money penalties. The MRB may also enter into settlement agreements with noncomplying Mortgagees. The following are general descriptions of the types of actions and sanctions that may be taken by the MRB and are for informational purposes only. The specific requirements for and procedures applicable to these actions are set forth in sections 202(c) and 536 of the National Housing Act (12 U.S.C. §§ 1708(c) and 1735f-14), and Parts 25 and 30 of Title 24 of the Code of Federal Regulations (24 CFR Parts 25 and 30). i. Letter of Reprimand The MRB may issue a letter of reprimand to inform a Mortgagee of its violation of FHA requirements. A letter of reprimand is effective upon receipt of the letter by the Mortgagee. (A) Case Status A letter of reprimand has no impact on the Mortgagee’s authority to originate, underwrite, or service FHA-insured Mortgages. (B) Duration There is no time duration associated with a letter of reprimand. (C) Appeal The Mortgagee has no right to appeal a letter of reprimand within HUD. ii. Probation The MRB may place a Mortgagee on probation for violation of FHA requirements. The MRB will specify the scope, terms, and conditions of the probation, which are designed to allow FHA to monitor the Mortgagee and assist FHA with bringing the Mortgagee into compliance with FHA regulations. (A) Case Status Unless specified in the terms of the probation, a Mortgagee on probation retains its origination, underwriting, and servicing authorities, as applicable. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE E. Enforcement 4. Mortgagee Review Board Actions and Sanctions Handbook 4000.1 1744 Last Revised: 11/26/2025 (B) Duration The MRB may place a Mortgagee on probation for a period of up to six months. (C) Appeal The Mortgagee has the right to appeal a probation action in accordance with the provisions of 24 CFR Parts 25–26. iii. Suspension Suspension is a temporary measure that is applied to a Mortgagee when there is adequate evidence that the interests of HUD or the public would not be served by continuing to allow the Mortgagee to participate in FHA programs, pending the completion of any investigation, other review, or legal or administrative proceedings the Mortgagee is involved in. (A) Effective Date If the MRB determines there is adequate evidence that immediate action is required to protect the financial interests of HUD or the public, the MRB is authorized to suspend a Mortgagee’s FHA approval immediately upon issuance of the notice of suspension and without prior issuance of a Notice of Violation (NOV) as set forth in 24 CFR § 25.7(d). Any other suspension is effective upon the Mortgagee’s receipt of the notice of suspension as set forth in 24 CFR § 25.5(d). (B) Case Status During the period of suspension, HUD will not endorse any Mortgage originated by the suspended Mortgagee unless it was an Approved Mortgage prior to the date of suspension. The Mortgagee must transfer all other applications in process to another FHA- approved Mortgagee for completion of processing, submission, and endorsement. (C) Duration Suspension is generally imposed for a period of six months to one year, but may be extended for an additional six months in accordance with the provisions of 24 CFR Part 25. (D) Appeal The Mortgagee has the right to appeal a suspension in accordance with the provisions of 24 CFR Parts 25–26. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE E. Enforcement 4. Mortgagee Review Board Actions and Sanctions Handbook 4000.1 1745 Last Revised: 11/26/2025 iv. Withdrawal of FHA Approval Only the MRB may withdraw a Mortgagee’s FHA approval. Withdrawal of FHA approval applies to all offices of the Mortgagee. (A) Effective Date If the MRB determines there is adequate evidence that immediate action is required to protect the financial interests of HUD or the public, the MRB is authorized to withdraw a Mortgagee’s FHA approval immediately; in this case, the withdrawal is effective upon the Mortgagee’s receipt of the notice of withdrawal. Any other withdrawal is effective upon either: • the expiration of the 30-Day appeal period, if the Mortgagee does not request a hearing; or • the receipt of the Administrative Law Judge’s final decision, if the Mortgagee does request a hearing within the 30-Day appeal period. (B) Case Status HUD will not endorse any Mortgage originated by the withdrawn Mortgagee unless it was an Approved Mortgage prior to the date of withdrawal. The withdrawn Mortgagee must transfer its servicing portfolio to another FHA- approved Mortgagee. See transfers of servicing and sales of Mortgages. Withdrawn FHA approval means that the Mortgagee may not originate, underwrite, service, or purchase any FHA-insured Mortgages. (C) Duration The MRB’s withdrawal of a Mortgagee’s FHA approval will be for a reasonable, specified period of time, but not less than one year. The MRB may permanently withdraw a Mortgagee’s FHA approval if it finds the Mortgagee’s violations to be egregious or willful. A withdrawn Mortgagee’s approval is not reinstated at the end of the period of withdrawal. The Mortgagee may re-apply for FHA approval after the period of withdrawal has expired. (D) Appeal The Mortgagee has the right to appeal a withdrawal of its FHA approval by the MRB in accordance with the provisions of 24 CFR Parts 25–26. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE E. Enforcement 4. Mortgagee Review Board Actions and Sanctions Handbook 4000.1 1746 Last Revised: 11/26/2025 v. Civil Money Penalties The MRB may impose civil money penalties against any FHA-approved Mortgagee who knowingly and materially violates FHA requirements as set forth in 24 CFR § 30.35. (A) Complaint If the MRB elects to seek civil money penalties against a Mortgagee, HUD will file a complaint to initiate legal action. A civil money penalty may be imposed against a Mortgagee in addition to any other administrative action taken by the MRB. (B) Maximum Civil Money Penalties The MRB is authorized to impose a civil money penalty, in accordance with the provisions of 24 CFR Part 30, against a party that knowingly and materially violates FHA program regulations or requirements. A civil money penalty may be imposed with respect to each insured Mortgage or other separate occurrence of a violation up to the maximum permitted under Part 30. (C) Mitigating and Aggravating Factors In determining the amount of a civil money penalty, the MRB will consider the following factors: • the gravity of the offense; • the Mortgagee’s history of prior offenses; • the Mortgagee’s ability to pay the penalty; • the injury to the public; • the benefits received by the violator; • the extent of potential benefit to other persons; • deterrence of future violations; and • the degree of the violator’s culpability. vi. Settlement Agreements The MRB is authorized to enter into settlement agreements with noncomplying Mortgagees at any time in order to resolve grounds for an administrative sanction or civil money penalty, as set forth in 12 U.S.C. § 1708(c)(3)(E) and 24 CFR § 25.5(a). Failure by the Mortgagee to comply with the terms of a settlement agreement may result in a suspension or withdrawal of the Mortgagee’s FHA approval.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part V — a. Actions and Sanctions (09/14/2015) · source URL · snapshot 8c03836f77f317e1