[Code of Federal Regulations]

[Title 24, Volume 1]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR81.46]



[Page 454-455]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

PART 81_THE SECRETARY OF HUD'S REGULATION OF THE FEDERAL NATIONAL 

MORTGAGE ASSOCIATION (FANNIE MAE) AND THE FEDERAL HOME LOAN MORTGAGE 

CORPORATION (FREDDIE MAC)--Table of Contents

 

                         Subpart C_Fair Housing

 

Sec.  81.46  Remedial actions.



    (a) General. The Secretary shall direct the GSEs to take one or more 

remedial actions, including suspension, probation, reprimand or 

settlement, against lenders found to have engaged in discriminatory 

lending practices in violation of the Fair Housing Act or ECOA, pursuant 

to a final adjudication on the record and an opportunity for a hearing 

under subchapter II of chapter 5 of title 5, United States Code.

    (b) Definitions. For purposes of this subpart, the following 

definitions apply:

    Indefinite suspension means that, until directed to do otherwise by 

the Secretary, the GSEs will refrain from purchasing mortgages from a 

lender.

    Probation means that, for a fixed period of time specified by the 

Secretary, a lender that has been found to have violated the Fair 

Housing Act or ECOA will be subject automatically to more severe 

sanctions than probation, e.g., suspension, if further violations are 

found.

    Remedial action includes a reprimand, probation, temporary 

suspension, indefinite suspension, or settlement.

    Reprimand means a written letter to a lender from a GSE, which has 

been directed to be sent by the Secretary, stating that the lender has 

violated the Fair Housing Act or ECOA and warning of the possibility 

that the Secretary may impose more severe remedial actions than 

reprimand if any further violation occurs.

    Temporary Suspension means that, for a fixed period of time 

specified by the Secretary, the GSEs will not purchase mortgages from a 

lender.

    (c) Institution of remedial actions. (1) The Secretary shall direct 

the GSE to take remedial action(s) against a lender charged with 

violating ECOA only after a final determination on the charge has been 

made by an appropriate United States District Court or any other court 

of competent jurisdiction. The Secretary shall direct the GSE to take 

remedial action(s) against a lender charged with violating the Fair 

Housing Act only after a final determination on the matter has been made 

by a United States Court, a HUD Administrative Law Judge, or the 

Secretary.

    (2) Following a final determination sustaining a charge against a 

lender for violating the Fair Housing Act or ECOA, in accordance with 

paragraph (c)(1) of this section, the Secretary shall determine the 

remedial action(s) that the GSE is to be directed to take for such 

violation.

    (3) In determining the appropriate remedial action(s), the Secretary 

shall solicit and fully consider the views of the Federal financial 

regulator responsible for the subject lender concerning the action(s) 

that are contemplated to be directed against such lender, prior to 

directing any such action(s). If such responsible Federal financial 

regulator makes a written determination that a particular remedial 

action would



[[Page 455]]



threaten the financial safety and soundness of a Federally-insured 

lender, the Secretary shall consider other remedial actions. Where 

warranted, the Secretary also shall solicit and fully consider the views 

of the Director regarding the effect of the action(s) that are 

contemplated on the safety and soundness of the GSE. In determining what 

action(s) to direct, the Secretary will also, without limitation, 

consider the following:

    (i) The gravity of the violation;

    (ii) The extent to which other action has been taken against the 

lender for discriminatory activities;

    (iii) Whether the lender's actions demonstrate a discriminatory 

pattern or practice or an individual instance of discrimination;

    (iv) The impact or seriousness of the harm;

    (v) The number of people affected by the discriminatory act(s);

    (vi) Whether the lender operates an effective program of self 

assessment and correction;

    (vii) The extent of any actions or programs by the lender designed 

to compensate victims and prevent future fair lending violations;

    (viii) The extent that a finding of liability against a lender is 

based on a lender's use of a facially-neutral underwriting guideline of 

a secondary mortgage market entity applied appropriately by the lender 

in order to sell loans to that secondary mortgage market entity; and

    (ix) Any other information deemed relevant by the Secretary.

    (d) Notice of remedial action(s). (1) Following the Secretary's 

decision concerning the appropriate remedial action(s) that the GSE is 

to be directed to take, the Secretary shall prepare and issue to the GSE 

and the lender a written notice setting forth the remedial action(s) to 

be taken and the date such remedial action(s) are to commence. The 

Notice shall inform the lender of its right to request a hearing on the 

appropriateness of the proposed remedial action(s), within 20 days of 

service of the Notice, by filing a request with the Docket Clerk, HUD 

Office of Administrative Law Judges.

    (2) Where a lender does not timely request a hearing on a remedial 

action, the GSE shall take the action in accordance with the Notice.

    (e) Review and decision on remedial action(s). (1) Where a lender 

timely requests a hearing on a remedial action, a hearing shall be 

conducted before a HUD administrative law judge (ALJ) and a final 

decision rendered in accordance with the procedures set forth in 24 CFR 

part 26, subpart B, to the extent such provisions are not inconsistent 

with subpart C of this part or FHEFSSA. The lender and the Secretary, 

but not the GSE, shall be parties to the action. At such hearing, the 

appropriateness of the remedial action for the violation(s) will be the 

sole matter for review. The validity or appropriateness of the 

underlying determination on the violation(s) shall not be subject to 

review at such hearing.

    (2) The Secretary shall transmit to the GSEs each final decision by 

HUD on a remedial action and any dispositive settlement of a proceeding 

on such action.

    (3) The GSE shall take the action(s) set forth in a final decision 

by HUD on remedial action(s) or any dispositive settlement of such a 

proceeding setting forth remedial action(s) in accordance with such 

decision or settlement.



[60 FR 61888, Dec. 1, 1995, as amended by 61 FR 50218, Sept. 24, 1996]