www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

 
December 21, 1994
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
Mortgagee Letter 94-59
 
     TO:  All Approved Mortgagees
 
        SUBJECT:        Mortgagee Review Board - Referral of Lenders
                        for violations of Fair Lending Laws
 
                The Department's Mortgagee Review Board is authorized to
        take administrative action and impose civil money penalties
        against HUD-FHA approved mortgagees that violate Federal fair
        housing laws.  The purpose of this Mortgagee Letter is to remind
        mortgagees that the Board will not tolerate discrimination in
        lending practices, and to further inform mortgagees of the
        Board's procedures.
 
     Administrative Sanctions and Civil Money Penalties
 
                The Board is authorized by statute, 12 USC Section 1708(c),
        and under its regulations, 24 CFR Part 25, to issue a letter of
        reprimand, place a mortgagee on probation, and suspend or
        withdraw HUD-FHA approval of any mortgagee found to be engaging
        in activities that violate the non-discrimination requirements of
        the Equal Credit Opportunity Act (ECOA), the Fair Housing Act,
        Executive Order 11063, or any HUD-FHA fair lending related
        requirement.
 
                The Board is also authorized to impose a civil money penalty
        of up to $5,000 per violation against a mortgagee that knowingly
        and materially fails to comply with the provisions of the Fair
        Housing Act or HUD-FHA fair lending related requirements.  The
        Board may also at any time enter into a Settlement Agreement with
        a mortgagee to resolve any outstanding grounds for an action.  A
        Mortgagee Review Board settlement does not, however, constitute a
        Title VIII settlement/conciliation.
 
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Office of Fair Housing and Equal Opportunity
 
        HUD's Office of Fair Housing and Equal Opportunity (FHEO) enforces the
Fair Housing Act and other civil rights laws.  Violations are subject to
injunctive or other appropriate relief, actual damages, and civil
penalties.  Additionally, FHEO may refer a HUD-FHA approved mortgagee to
the Board for administrative action.  FHEO and the Board are committed to
expanding access to HUD housing programs and are actively undertaking
proactive steps to identify lending discrimination and bring strong
enforcement action against mortgagees that violate fair lending laws.
 
FHEO Referrals to Mortgagee Review Board
 
        As part of its mission to aggressively pursue fair lending
requirements and discriminatory lending practices, FHEO will actively make
referrals of mortgagees, where appropriate, to the Board for administrative
sanctions and civil money penalties.  Mortgagees are advised that if FHEO
makes a determination that there is reasonable cause to believe that a
mortgagee has engaged in discriminatory lending practices and a Charge is
issued against that mortgagee, the determination and Charge will be
referred to the Board for administrative sanctions.  In addition, FHEO may
inform the Board of any finding of discrimination under ECOA or the Fair
Housing Act in a private lawsuit using the same procedures.  The Board may
take action against the mortgagee independent of any other enforcement
activities pursued by FHEO.  In addition, FHEO may take action independent
of any settlement or administrative sanctions pursued by the Board.
 
        Mortgagees are also reminded that failure to cooperate with any FHEO
investigation is in itself a cause for an administrative action by the
Board under 24 CFR Section 25.9(q).  FHEO intends to refer information
relating to mortgagees' failure to cooperate with investigations, even if
it has not made a determination that the Fair Housing Act has been
violated.
 
Board Procedures
 
        The Department's regulations governing the Board's activities
including civil money penalties, provide that when the Board considers a
mortgagee for administrative sanctions and/or civil money penalties, it
shall notify the mortgagee in writing of the specific violations that have
been alleged, 24 CFR Section 25.6, and 24 CFR 30.100, and provide the
mortgagee with the opportunity to submit a written response within 30 days
of its receipt of the notice.  Failure to respond will result in the matter
being considered by the Board without any further notice.
 
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        When the Board takes an administrative action against a mortgagee, it
notifies the mortgagee in writing of the Board's determination.  In those
cases where the Board places a mortgagee on probation, or suspends or
withdraws the mortgagee's HUD-FHA approval, the mortgagee may request a
hearing before a Departmental Hearing Officer and the hearing will be held
within 30 days of the request.  A mortgagee may also request a hearing
before an Administrative Law Judge within 15 days from the issuance of the
Government's Complaint, where the Board decides to impose a civil money
penalty.
 
        FHA approved mortgagees are important partners in the Department's
programs.  I ask you to use diligence to ensure that you are conducting
your lending activities in full compliance with the fair housing laws.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing-
Federal Housing Commissioner