[Federal Register Volume 72, Number 24 (Tuesday, February 6, 2007)]
[Rules and Regulations]
[Pages 5586-5589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-1941]



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Part V





Department of Housing and Urban Development





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24 CFR Parts 28, 30, 81, 180, 3282, and 3500



 Inflation Adjustment of Civil Money Penalty Amounts; Final Rule

  Federal Register / Vol. 72, No. 24 / Tuesday, February 6, 2007 / 
Rules and Regulations  

[[Page 5586]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 28, 30, 81, 180, 3282, and 3500

[Docket No. FR-5104-F-01]
RIN 2501-AD30


Inflation Adjustment of Civil Money Penalty Amounts

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This final rule revises HUD's civil money penalty regulations 
to make inflation adjustments to the civil money penalties imposed by 
HUD, as required by statute. The applicable statute mandates the 
adjustments and the formula used to calculate them. HUD also takes this 
opportunity to delete duplicative language in its regulation for 
hearing procedures in civil rights matters.

DATES: Effective Date: March 8, 2007.

FOR FURTHER INFORMATION CONTACT: Dane Narode, Deputy Chief Counsel for 
Administrative Proceedings, Departmental Enforcement Center, Department 
of Housing and Urban Development, 1250 Maryland Avenue, SW., Suite 200, 
Washington, DC 20024; telephone (202) 708-2350 (this is not a toll-free 
number). For information regarding the correction to HUD's regulation 
for hearing procedures in civil rights matters, contact Joseph 
Pelletier, Deputy Assistant General Counsel for Fair Housing 
Enforcement, Office of General Counsel, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Room 10270, Washington, DC 20410; 
telephone (202) 708-0570 (this is not a toll-free number). Hearing- or 
speech-impaired individuals may access this number via TTY by calling 
the toll-free Federal Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. This Final Rule

A. Inflation Adjustment of Civil Money Penalty Amounts

    The changes made by this rule increase the amount of civil money 
penalties, consistent with statutory authority.
    The Federal Civil Penalties Inflation Adjustment Act of 1990 (28 
U.S.C. 2461) (FCPIA Act), as amended by the Debt Collection Improvement 
Act of 1996 (31 U.S.C. 3701), requires each federal agency to make 
inflation adjustments to its maximum civil money penalties. This rule 
raises the maximum penalties that HUD may impose upon violators with 
respect to several HUD regulations found in 24 CFR parts 28, 30, 81, 
180, 3282, and 3500. For civil money penalties found in some HUD 
regulations (e.g., 24 CFR 30.55, 30.68, 3282.10, and 3500.17(m)(2)), no 
amendment is necessary because application of the statute's formula 
results in no increase to the penalty. The FCPIA Act provides for a 
``rounding-off,'' using multiples from $10 to $25,000, of the increase 
calculated based on the change in the Consumer Price Index (CPI). (See 
28 U.S.C. 2461(5)(a).) Consequently, in those instances in which the 
increased dollar amount is determined to be less than the applicable 
multiple, the existing penalty is unchanged. The following regulations 
are revised by this rule.
    In Sec.  28.10, the maximum penalties for making a false claim or 
written statement, as described in the regulation, are increased from 
$6,500 to $7,500.
    In Sec.  30.20(b), the maximum penalty that HUD may impose upon its 
employees who improperly disclose funding decisions is increased from 
$11,000 to $16,000.
    In Sec.  30.25(b), the maximum penalty that HUD may impose upon 
applicants for assistance who fail to disclose required information is 
increased from $11,000 to $16,000.
    In Sec.  30.35(c)(1), the maximum penalties that the Mortgagee 
Review Board may impose for a series of violations identified in the 
regulations are increased from $6,500 to $7,500 per violation, and from 
$1.25 million to $1.375 million for all violations committed during any 
one-year period.
    In Sec.  30.36(c), the maximum penalty that HUD may impose upon 
other participants in Federal Housing Administration programs for 
violations identified in the regulation is increased from $5,500 to 
$6,050, and from $1.1 million to a maximum of $1.21 million for all 
violations committed during any one-year period.
    In Sec.  30.40, the maximum penalty that HUD may impose upon a 
mortgagee or a holder of a guarantee certificate who violates the 
statutory provisions concerning loan guarantees for Indian housing is 
increased from $6,000 to $7,000 per violation, and from $1.25 million 
to a maximum of $1.375 million for all violations committed during any 
one-year period.
    In Sec.  30.45(g), the maximum penalty that may be imposed upon a 
mortgagor of a multifamily property or on any person in a relationship 
with the mortgagor, as described in the regulations at paragraph (c) of 
Sec.  30.45, is increased to $37,500 per violation. In addition, 
paragraph (g) is corrected to provide expressly for imposition of the 
same maximum penalty per violation of paragraph (f), which relates to 
section 202 and section 811 projects.
    In Sec.  30.50(c), the maximum penalty that may be imposed against 
a Government National Mortgage Association issuer or custodian for a 
violation of any provision of 12 U.S.C. 1723i(b) or other authorities 
cited in the regulations is increased from $6,500 to $7,500 per 
violation, and from $1.25 million to $1.375 million for all violations 
committed during any one-year period.
    In Sec.  30.55(c), the maximum penalty for each violation of any 
provision of the Interstate Land Sales Full Disclosure Act (15 U.S.C. 
1701 et seq.) remains unchanged at $1,100, but the one-year maximum per 
person increases from $1.25 million to $1.375 million.
    In Sec.  30.60(c), the maximum penalty that HUD may impose upon any 
dealer or loan correspondent for, among other things, falsifying 
statements or making false representations in violation of section 
2(b)(7) of the National Housing Act (12 U.S.C. 1703(b)(7)), is 
increased from $6,500 to $7,500 for each violation, and from $1.25 
million to a maximum of $1.375 million during any one-year period.
    In Sec.  81.83(b)(1), the maximum penalty that HUD may impose upon 
a Government Sponsored Enterprise (GSE) is increased from $30,000 to 
$35,000 for each day the GSE fails to submit a timely housing plan.
    In Sec.  81.83(b)(2), the maximum penalty that HUD may impose upon 
a GSE that fails to submit information required by the Fannie Mae 
Charter Act (12 U.S.C. 1716-1723h) or Freddie Mac Act (12 U.S.C. 1451-
59), or that fails to make a good faith effort to comply with its 
approved housing plan, is increased from $11,000 to $16,000 for each 
day the failure occurs.
    In Sec. Sec.  180.671(a) (1), (2), and (3), the maximum penalty 
that the Administrative Law Judge may impose upon a respondent who is 
found to have engaged in a discriminatory housing practice is increased 
from $11,000 to $16,000, from $32,500 to $37,500, and from $60,000 to 
$65,000.
    In Sec.  3282.10, the maximum penalty for each violation of the 
National Manufactured Housing Construction and Safety Standards Act of 
1974 (42 U.S.C. 5401 et seq.) remains unchanged at $1,100. The one-year 
maximum for any related series of violations occurring within one year 
from the date of the first

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violation is increased from $1.25 million to $1.375 million.
    In Sec.  3500.17(m)(1), the penalty for a servicer's failure to 
submit to a borrower an initial or annual escrow account statement is 
increased from $65 to $75 for each such violation. The total of 
assessed penalties may not exceed $130,000 (increased from the existing 
total of $120,000) for violations not shown to be intentional that 
occur during any consecutive 12-month period. However, in Sec.  
3500.17(m)(2), the penalty for failure to submit an escrow statement 
when the servicer intentionally disregarded the requirement remains 
unchanged at $110 for each violation.

B. Correction to 24 CFR 180.670

    On December 18, 1997, HUD published a proposed rule (62 FR 66488) 
to amend its regulations governing hearing procedures for civil rights 
matters. The proposed rule provided for imposition of multiple 
penalties for multiple acts of discrimination. In addition, HUD 
intended the rule to make clarifying changes by moving paragraphs 
governing civil money penalties from the existing Sec.  180.670 to a 
new Sec.  180.671 and by updating the penalty paragraphs' text. HUD 
received and responded to public comments on the proposed rule and 
published an interim rule on February 10, 1999 (64 FR 6744). However, a 
typographical error in the amendatory language of the interim rule 
caused the penalty paragraphs to remain in Sec.  180.670 while also 
establishing the updated paragraphs in the new Sec.  180.671, creating 
the appearance of two distinct sets of penalties. After an additional 
round of public comment and HUD response, the interim rule was then 
adopted as final without change on December 28, 1999 (64 FR 72726). HUD 
takes this opportunity to correct this error by deleting the old 
paragraphs (b)(3)(iii) (A) through (C) in Sec.  180.670, as intended in 
the interim and final rules. The corresponding paragraphs in Sec.  
180.671 remain unchanged.

II. Justification for Final Rulemaking

    In general, HUD publishes a rule for public comment before issuing 
a rule for effect, in accordance with HUD's regulations on rulemaking 
at 24 CFR part 10. Part 10, however, provides in Sec.  10.1 for 
exceptions from that general rule where HUD finds good cause to omit 
advance notice and public participation. The good cause requirement is 
satisfied when the prior public procedure is ``impracticable, 
unnecessary or contrary to the public interest.''
    HUD finds that good cause exists to publish this rule for effect 
without soliciting public comment in that prior public procedure is 
unnecessary. The primary purpose of this final rule is merely to 
implement the statutory directive in the FCPIA Act to make periodic 
increases in HUD's civil money penalties by applying the adjustment 
formula established in the statute. Accordingly, because calculation of 
the increases is formula-driven, HUD has no discretion in updating the 
regulations to reflect the maximum allowable penalties derived from 
application of the formula. HUD emphasizes that this rule addresses 
only the matter of the calculation of the maximum civil money penalties 
for the respective violations described in the regulations. This rule 
does not address the issue of the Secretary's discretion to impose or 
not to impose a penalty, nor the procedures that HUD must follow in 
initiating a civil money penalty action.
    The second purpose of this rule is to make corrections to Sec.  
180.670 by deleting paragraphs inadvertently left in it as a result of 
a typographical error in the 1999 interim rule. The preambles of the 
proposed and interim rules made clear that the intent was to update and 
move these paragraphs to Sec.  180.671, thereby deleting the old 
paragraphs from Sec.  180.670. The specific changes were detailed in 
both the proposed and interim rules, and HUD provided two opportunities 
for public comment on the changes before adopting the final rule. This 
rule merely implements those changes by correcting the typographical 
error that prevented deletion of the old paragraphs in Sec.  180.670. 
Since HUD is merely correcting a typographical error, public comment is 
unnecessary.

III. Findings and Certifications

Impact on Small Entities

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. This final rule does 
not establish special procedures that would need to be complied with by 
small entities. All entities, small or large, will be subject to the 
same penalties as established by statute and implemented by this rule. 
Accordingly, the undersigned certifies that this final rule would not 
have a significant economic impact on a substantial number of small 
entities.

Environmental Impact

    This final rule involves a statutorily required rate or cost 
determination that does not constitute a development decision affecting 
the physical condition of specific project areas or building sites. 
Accordingly, under 24 CFR 50.19(c)(6), this final rule is categorically 
excluded from environmental review under the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on state and local governments nor preempt state law 
within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments and the private sector. This final rule does not 
impose any federal mandates on any state, local, or tribal governments 
or the private sector within the meaning of UMRA.

List of Subjects

24 CFR Part 28

    Administrative practice and procedure, Claims, Fraud, Penalties.

24 CFR Part 30

    Administrative practice and procedure, Grant programs--housing and 
community development, Loan programs--housing and community 
development, Mortgages, Penalties.

24 CFR Part 81

    Accounting, Mortgages, Reporting and recordkeeping requirements, 
Securities.

24 CFR Part 180

    Administrative practice and procedure, Aged, Civil Rights, Fair 
housing, Individuals with disabilities, Investigations, Mortgages, 
Penalties, Reporting and recordkeeping requirements.

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24 CFR Part 3282

    Administrative practice and procedure, Consumer protection, 
Intergovernmental relations, Investigations, Manufactured homes, 
Mortgages, Reporting and recordkeeping requirements.

24 CFR Part 3500

    Consumer protection, Housing, Mortgages, Reporting and 
recordkeeping requirements.


0
Accordingly, for the reasons described in the preamble, HUD amends 24 
CFR parts 28, 30, 81, 180, 3282, and 3500 to read as follows:

PART 28--IMPLEMENTATION OF THE PROGRAM FRAUD CIVIL REMEDIES ACT OF 
1986

0
1. The authority citation for part 28 continues to read as follows:

    Authority: 28 U.S.C. 2461 note; 31 U.S.C. 3801; 42 U.S.C. 
3535(d).


0
2. Revise Sec. Sec.  28.10 (a)(1) introductory text and (b)(1) 
introductory text to read as follows:


Sec.  28.10  Basis for civil penalties and assessments.

    (a) Claims. (1) A civil penalty of not more than $7,500 may be 
imposed upon a person who makes a claim that the person knows or has 
reason to know:
* * * * *
    (b) Statements. (1) A civil penalty of up to $7,500 may be imposed 
upon a person who makes a written statement that:
* * * * *

PART 30--CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT

0
3. The authority citation for part 30 continues to read as follows:

    Authority: 12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, 1735f-15; 
15 U.S.C. 1717a; 28 U.S.C. 2461 note; 42 U.S.C. 1437z-1 and 3535(d).


0
4. Revise Sec.  30.20(b) to read as follows:


Sec.  30.20  Ethical violations by HUD employees.

* * * * *
    (b) Maximum Penalty. The maximum penalty is $16,000 for each 
violation.

0
5. Revise Sec.  30.25(b) to read as follows:


Sec.  30.25  Violations by applicants for assistance.

* * * * *
    (b) Maximum penalty. The maximum penalty for each violation is 
$16,000.

0
6. Revise Sec.  30.35(c)(1) to read as follows:


Sec.  30.35  Mortgagees and lenders.

* * * * *
    (c) Amount of penalty--(1) Maximum penalty. Except as provided in 
paragraph (c)(2) of this section, the maximum penalty is $7,500 for 
each violation, up to a limit of $1,375,000 for all violations 
committed during any one-year period. Each violation shall constitute a 
separate violation as to each mortgage or loan application.
* * * * *

0
7. Revise Sec.  30.36(c) to read as follows:


Sec.  30.36  Other participants in FHA programs.

* * * * *
    (c) Amount of penalty. The maximum penalty is $6,050 for each 
violation, up to a limit of $1,210,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.

0
8. Revise Sec.  30.40(c) to read as follows:


Sec.  30.40  Loan guarantees for Indian housing.

* * * * *
    (c) Amount of penalty. The maximum penalty is $7,000 for each 
violation, up to a limit of $1,375,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.

0
9. Revise Sec.  30.45(g) to read as follows:


Sec.  30.45  Multifamily and Section 202 or 811 mortgagors.

* * * * *
    (g) Maximum penalty. The maximum penalty for each violation under 
paragraphs (c) and (f) of this section is $37,500.
* * * * *

0
10. Revise Sec.  30.50(c) to read as follows:


Sec.  30.50  GNMA issuers and custodians.

* * * * *
    (c) Amount of penalty. The maximum penalty is $7,500 for each 
violation, up to a limit of $1,375,000 during any one-year period. Each 
violation shall constitute a separate violation with respect to each 
pool of mortgages.

0
11. Revise Sec.  30.55(c) to read as follows:


Sec.  30.55  Interstate Land Sales violations.

* * * * *
    (c) Amount of penalty. The maximum penalty is $1,100 for each 
violation, up to a limit for any particular person of $1,375,000 during 
any one-year period. Each violation shall constitute a separate 
violation as to each sale or lease or offer to sell or lease.

0
12. Revise Sec.  30.60(c) to read as follows:


Sec.  30.60  Dealers or loan correspondents.

* * * * *
    (c) Amount of penalty. The maximum penalty is $7,500 for each 
violation, up to a limit for any particular person of $1,375,000 during 
any one-year period.

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)

0
13. The authority citation for part 81 continues to read as follows:

    Authority: 12 U.S.C. 1451 et seq., 1716-1723h, and 4501-4641; 28 
U.S.C. 2461 note; 42 U.S.C. 3535(d) and 3601-3619.


0
14. Revise Sec. Sec.  81.83 (b)(1) and (b)(2) to read as follows:


Sec.  81.83  Civil money penalties.

* * * * *
    (b) * * *
    (1) For any failure described in paragraph (a)(1) of this section, 
$35,000 for each day that the failure occurs; and
    (2) For any failure described in paragraphs (a)(2) or (a)(3) of 
this section, $16,000 for each day that the failure occurs.
* * * * *

PART 180--CONSOLIDATED HUD HEARING PROCEDURES FOR CIVIL RIGHTS 
MATTERS

0
15. The authority citation for part 180 continues to read as follows:

    Authority: 29 U.S.C. 794; 42 U.S.C. 2000d-1, 3535(d), 3601-3619, 
5301-5320, and 6103.


0
16. Revise Sec.  180.670(b)(3)(iii) to read as follows:


Sec.  180.670  Initial Decision of ALJ.

* * * * *
    (b) * * *
    (3) * * *
    (iii) Assessing a civil penalty against any respondent to vindicate 
the public interest in accordance with Sec.  180.671.
* * * * *

0
17. Revise Sec. Sec.  180.671(a)(1), (2), and (3) to read as follows:


Sec.  180.671  Assessing civil penalties for Fair Housing Act cases.

    (a) * * *
    (1) $16,000, if the respondent has not been adjudged in any 
administrative hearing or civil action permitted under the Fair Housing 
Act or any state or local fair housing law, or in any licensing or 
regulatory proceeding

[[Page 5589]]

conducted by a federal, state, or local governmental agency, to have 
committed any prior discriminatory housing practice.
    (2) $37,500, if the respondent has been adjudged in any 
administrative hearing or civil action permitted under the Fair Housing 
Act, or under any state or local fair housing law, or in any licensing 
or regulatory proceeding conducted by a federal, state, or local 
government agency, to have committed one other discriminatory housing 
practice and the adjudication was made during the five-year period 
preceding the date of filing of the charge.
    (3) $65,000, if the respondent has been adjudged in any 
administrative hearings or civil actions permitted under the Fair 
Housing Act, or under any state or local fair housing law, or in any 
licensing or regulatory proceeding conducted by a federal, state, or 
local government agency, to have committed two or more discriminatory 
housing practices and the adjudications were made during the seven-year 
period preceding the date of filing of the charge.
* * * * *

PART 3282--MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

0
18. The authority citation for part 3282 continues to read as follows:

    Authority: 28 U.S.C. 2461 note; 42 U.S.C. 5424; and 42 U.S.C. 
3535(d).


0
19. Revise Sec.  3282.10 to read as follows:


Sec.  3282.10  Civil and criminal penalties.

    Failure to comply with these regulations may subject the party in 
question to the civil and criminal penalties provided for in section 
611 of the Act, 42 U.S.C. 5410. The maximum amount of penalties imposed 
under section 611 of the Act shall be $1,100 for each violation, up to 
a maximum of $1,375,000 for any related series of violations occurring 
within one year from the date of the first violation.

PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT

0
20. The authority citation for part 3500 continues to read as follows:

    Authority: 12 U.S.C. 2601 et seq.; 42 U.S.C. 3535(d).


0
21. Revise Sec.  3500.17(m)(1) to read as follows:


Sec.  3500.17  Escrow accounts.

* * * * *
    (m) Penalties. (1) A servicer's failure to submit to a borrower an 
initial or annual escrow account statement meeting the requirements of 
this part shall constitute a violation of section 10(d) of RESPA (12 
U.S.C. 2609(d)) and this section. For each such violation, the 
Secretary shall assess a civil penalty of 75 dollars ($75), except that 
the total of the assessed penalties shall not exceed $130,000 for any 
one servicer for violations that occur during any consecutive 12-month 
period.
* * * * *

    Dated: January 26, 2007.
Roy A. Bernardi,
Deputy Secretary.
[FR Doc. E7-1941 Filed 2-5-07; 8:45 am]
BILLING CODE 4210-67-P