15.6 Letters of Caution, Warning Letters or Sanctions

A. A MAP Lender’s improper, inaccurate, inadequate or negligent underwriting and/or construction loan administration may lead to the issuance of a Letter of Caution or a Warning Letter or other sanction. The issuance of a Letter of Caution or a Warning Letter is not a prerequisite to the Probation, Suspension or Termination of a Lender’s MAP privileges. See Appendix 15 for an explanation of the MAP Lender Deficiency Taxonomy and a list of Lender deficiencies or noncompliance that may be the basis for the issuance or either letter.

B. A Letter of Caution may be issued for relatively minor violations which are of low severity that do not rise to the level of a Warning Letter and do not require the imposition of Lender sanctions or Targeted Enforcement Measures. Violations that may result in issuance of a Letter of Caution are usually due to the Lender’s failure to comply with its administrative or reporting obligations to HUD or with MAP loan application processing requirements, which the letter will direct the Lender to address. Only the Director of COB may issue a Letter of Caution but, since the letter will only address corrective actions to be taken and since Lender sanctions will not be imposed, there is no appeal.