**U.S. Department of Housing and Urban Development**

**Office of Housing**

**Special Attention of: NOTICE** H 00-22 (HUD)

**All Homeownership Center Directors Issued:** 10/18/00

**All REO Directors Expires:** 10/31/01

**All Processing & Underwriting Directors**

**All Quality Assurance Directors**

**All Real Estate Owned Branch Chiefs**

**All Management and Marketing Contractors Cross References:**

**Subject: Disciplinary Actions Against HUD-Qualified Real Estate
Brokers.**

The Department recently announced a series of new initiatives to address
predatory lending practices targeted at FHA borrowers. These initiatives
include actions to prevent property \"flipping\", inflated appraisals,
falsified gift letters and fraudulent underwriting. The Department will
use existing enforcement tools in 24 CFR Part 24 to discipline any
program participants, including real estate brokers, involved in any
aspect of predatory lending.

This Notice provides guidance on disciplinary actions to be taken
against real estate brokers on HUD\'s qualified selling broker list
maintained in the Single Family Acquired Asset Management System (SAMS)
as well as guidance on the procedure for deactivation of the real estate
broker\'s Name/Address Identifier (NAID) in SAMS. The NAID is the
identifier which enables a broker to be compensated for services
rendered. Deactivation of the NAID removes the ability for the broker to
participate in the sale of HUD-owned single family properties.

***Reasons for Removal from the Qualified Selling Broker List and
Deactivation of the NAID***

Real estate brokers that are involved in Real Estate Owned (REO) Sales
will be removed from HUD\'s qualified selling broker list and have their
NAID deactivated, thereby restricting their ability to participate in
the sale of HUD-owned single family properties, if:

> \(i\) The real estate broker has violated 18 U.S.C. 1010, 3559; 3571
> by falsifying information on the Sales Contract (form HUD-9548) or any
> other form of the Department of Housing and Urban Development.
>
> \(ii\) The real estate broker is falsifying loan documents or aiding
> or abetting their use of false or misleading information including,
> but not limited to forged or fraudulent gift letters and owner
> occupant certifications.
>
> \(iii\) The Department has confirmed that there is evidence that the
> real estate broker has acted in concert with the appraiser to arrive
> at an artificially appraised value.
>
> \(iv\) The real estate broker participates or encourages down-payment
> assistance gifts that are not consistent with the Department\'s
> regulations governing this assistance.
>
> \(v\) There is evidence of fraudulent activities brought on by a
> HUD-qualified real estate broker (with or without the assistance of an
> appraiser) which has led to default and payment of an insurance claim.

**HSIP Distribution:** W-3-1, W-2(OGC)(H)(Z), W-3(A)(H)(ZAOO), W-4(H),
R-1, R-2, R-3, R-3-1(H)(RC), R-3-2, R-3-3, R-6,

R-6-1, R-6-2, R-7, R-7-1, R-7-2, R-8, R-8-1

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> \(vi\) There is a violation of the terms of the [Selling Broker
> Certification]{.underline}, form SAMS-1111-A, such as by not abiding
> by the Department\'s earnest money policy by failing to fully explain
> HUD\'s earnest money forfeiture policy to each purchaser prior to a
> contract being written.
>
> HUD reserves the right to remove brokers for reasons other than those
> on this list.

***Procedure for Removal from the Qualified Selling Broker List and
Deactivation of the NAID***

[Procedure for Removal from HUD\'s Qualified Selling Broker
List]{.underline}

\(i\) Real estate brokers will be given written notice of the proposed
removal, stating reasons for this action and the duration of the
proposed removal. The duration listed in this notice will reflect the
number, extent and seriousness of the broker\'s improper actions. The
proposed effective date of the broker\'s removal will be 30 days from
the date of the notice.

\(ii\) Real estate brokers will be given 20 days from the date of the
notice to appeal the proposed removal. The appeal must be submitted in
writing to the Homeownership Center (HOC) Director within this time
period. A conference may also be requested in writing to the HOC
Director. If a conference is requested, it will be heard within 15 days
of receipt of the request. Within 20 days of the completion of the
conference, the HOC Director will advise the real estate broker in
writing of his decision to rescind, modify, or affirm the removal from
HUD\'s qualified selling broker list. If the written appeal did not
request a conference, the appeal will similarly be responded to in
writing by the HOC Director within 20 days of receipt of the appeal.

\(iii\) If no appeal is filed, the decision to remove will be final and
effective 30 days from the date of the notice.

\(iv\) Although the removal of the broker from HUD\'s qualified selling
broker list is for an entire company, these removal procedures do not
prohibit HUD from debarring, suspending, or issuing a limited denial of
participation, or from seeking any other remedy against an
**individual** real estate broker or sales agent available to HUD by
statute or otherwise. Where there is evidence of fraud, the matter
should be referred to the Office of Inspector General.

[Deactivation of NAID]{.underline}

\(i\) If no appeal is filed or if the HOC Director\'s decision is to
remove the real estate broker from HUD\'s qualified selling broker list,
the HOC will prepare form SAMS-1117, Payee Deactivation Request.
Preparation of this form is the first step in deactivating the NAID. The
form can be downloaded at: **http://www.hudclips.org.** Following the
preparation of form SAMS-1117, it is to be approved and signed by the
REO Director, or his or her designee, and forwarded to the SAMS Service
Contractor for deactivation.

\(ii\) The HOC is responsible for managing the removal of the NAID by
assigning one person as the Payee Deactivation Coordinator. This
individual is responsible for managing the NAID removal process. This
process is actively managed by verifying the \"Status\" field on the
SAMS QGBNA screen. If the status code shows \"I\" (Inactive) rather than
\"A\" (Active), the payee has been

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> deactivated. If the Payee Deactivation Coordinator encounters
> problems, the Single Family Acquired Asset Branch (SFAAB) desk officer
> should be contacted for assistance. The individuals listed below are
> responsible for managing the removal of the NAIDS:
>
> Philadelphia HOC - Chris Boguslaw
>
> Atlanta HOC - Martha Winslow-Cole
>
> Denver HOC - Marc Friedland
>
> Santa Ana HOC - Susan Vukson
>
> Each division which discovers improper actions of real estate brokers,
> whether detected during

Quality Assurance Division monitoring, REO monitoring, Processing and
Underwriting Division post-endorsement technical reviews, or other
situations, has the responsibility to take action in coordination with
REO staff to deactivate the payee and remove the real estate broker from
HUD\'s qualified selling broker list.

Please inform your staff of these changes promptly. If you have
questions, you may contact the Office of Single Family Asset Management
at (202) 708-1672.

> William C. Apgar
>
> Assistant Secretary for Housing -
>
> Federal Housing Commissioner