A.15.2 MAP Lender Compliance

A. Chapter 2 sets forth various standards and obligations for lender compliance with MAP program requirements. The list of lender standards and obligations, below, indicates whether a noncompliance is of high or low severity and the likely sanctions for a noncompliance under Chapter 15.

B. Instances of lender noncompliance which are of low severity and for which a Letter of Caution may be issued include, but are not limited to:

1. Failure to seek or obtain COB’s approval for administrative matters requiring its review, including lender change of control, sale, merger or license transfers, as is required by Chapter 2, Section 2.8.

2. Failure to notify COB of changes in, or transfers of, key MAP personnel, including MAP approved underwriters and chief underwriters, as is required by Chapter 2, Section 2.10.2 and Section 2.10.3 and Section 2.12.

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3. Failure to notify COB of changes in the lender’s Quality Control plan, failure to conduct an annual Quality Control review, failure to notify COB of the results of the review or to submit an annual QC certification or a transaction tracking report, or failure of the lender to comply with its own Quality Control plan, as is required by Chapter 2, Section 2.9.

4. Material failure to comply with any agreement, certification, undertaking or condition of approval listed in a MAP Lender’s application for approval.

5. Failure: a) to respond in a timely manner to inquiries from; b) to comply with any requirement or directive of; or c) to cooperate with an inquiry, review, audit or investigation into the conduct of the MAP Lender, its MAP applications or its FHA insured mortgages by, the Director of OMP, COB, the DAS for Multifamily Housing, the MAP Lender Review Board, the Mortgagee Review Board, the Departmental Enforcement Center or the Office of Inspector General.

C. Instances of lender noncompliance which are of high severity and for which a Warning Letter may be issued and targeted enforcement measures or other sanctions may be imposed include, but are not limited to:

1. Identities of Interest or conflicts of interest between the parties to a MAP transaction which are not disclosed to or approved by HUD prior to or during application processing and are discovered after a Firm Commitment has been issued, as is prohibited by Chapter 2, Section 2.6.5.

2. Providing prohibited inducements to a borrower in exchange for their agreeing to engage the lender to process a MAP application, as is prohibited by Chapter 2, Section 2.6.4.7.

3. Payment of referral fees to persons or firms which are not actively engaged in the mortgage origination business and are not mortgage brokers, correspondents or consultants, as is prohibited by Chapter 2, Section 2.4.

4. Payment of refunds or kickbacks to a borrower which are prohibited by the MAP Guide and are not disclosed to HUD, as is prohibited by Chapter 2, Section 2.6.1.

5. Payment by or receipt of a payment by a MAP Lender of any kickback, referral fee or other consideration, directly or indirectly from the sponsor or from any other participant in the transaction, that would affect the lender’s independent evaluation or represent a conflict of interest, in connection with any insured mortgage transaction, as is prohibited by Chapter 2, Section 2.6.1.

6. Entering into a side agreement with a borrower or other parties to the transaction which is not disclosed to HUD and is intended to circumvent MAP requirements, as is prohibited by Chapter 2, Section 2.6.4.7.

7. Failure to administer rehabilitation or construction escrow disbursements and site inspections in accordance with the requirements of the MAP Guide, as is required by Chapter 2, Section 2.5.2.

8. Employing or retaining an employee, officer, partner, director, principal or third party firm and who is or will be working on MAP program matters at the time when the person or firm was suspended, debarred, ineligible, subject to an LDP or otherwise prohibited from participation in HUD programs, when the MAP Lender knew or should have known of the prohibition, as is prohibited by Chapter 2, Section 2.6.3.

9. A violation of any Federal Statutes or Regulations or of the requirements of any contract with HUD.

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10. Fraud or material misrepresentation on the part of the lender in its participation in any FHA multifamily programs. Note, a lender convicted of fraud may be subject to further action under Public Law 111-22.

11. Indictment or conviction of a MAP Lender or any of its officers, directors, principals or employees for an offense that reflects on the responsibility, integrity or ability of the lender to participate in the MAP program.