12 USC 1723i - Civil money penalties against issuers

U.S Code last checked for updates: Feb 21, 2025

§ 1723i.

Civil money penalties against issuers

(a)

In general

(1)

Authority

(2)

Amount of penalty

(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) 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

(c)

Agency procedures

(1)

Establishment

The Secretary shall establish standards and procedures governing the imposition of civil money penalties under subsection (a). 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

(3)

Factors in determining amount of penalty

(4)

Reviewability of imposition of penalty

(d)

Judicial review of agency determination

(1)

In general

(2)

Objections not raised in hearing

(3)

Scope of review

(4)

Order to pay penalty

(e)

Action to collect penalty

(f)

Settlement by Secretary

(g)

“Knowingly” defined

(h)

Regulations

(i)

Deposit of penalties

(June 27, 1934, ch. 847, title III, § 317, as added Pub. L. 101–235, title I, § 110(a), Dec. 15, 1989, 103 Stat. 2011; amended Pub. L. 104–208, div. A, title II, § 2704(d)(13)(A), Sept. 30, 1996, 110 Stat. 3009–490; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 9(f)(1), Feb. 15, 2006, 119 Stat. 3618.)

cite as: 12 USC 1723i