CHAPTER 4 

RESTORING COMPLIANCE 

When owners fail to meet program requirements, monitoring agencies 

must compel them to take steps to restore compliance. Although enforcing 

program requirements can be a difficult and often frustrating task, it is vital to 

assuring the ongoing affordability of AHP properties. 

This Chapter describes the procedures monitoring agency staff should 

follow when a property no longer meets the requirements established in the 

LURA. It: 

0	 provides an overview of the process; 

0	 describes the procedures for notifying owners of compliance violations; 

0	 identifies the corrective actions necessary to restore compliance; 

0	 discusses the follow-up measures agencies should take once a noncompliance notice has been issued; and 

0	 outlines the enforcement actions available to agencies in cases of 

continued non-compliance. 

4.1 OVERVIEW 

When monitoring staff have determined that an owner has failed to 

comply with AHP requirements and procedures, an agency must: 

0	 notify the owner of the compliance violation and the actions necessary to 

restore compliance; 

0	 take follow-up actions to monitor owner progress toward compliance and 

provide necessary technical support; 

0	 re-evaluate owner compliance at the end of the corrective action period; 

and 

0	 take additional enforcement actions in cases of continued noncompliance.
 

The procedures for handling serious compliance violations, such as 

failing to maintain the required number of set aside units or charging rents that 

exceed the appropriate limit, are quite specific. The procedures for less serious 

AHP Compliance Monitoring Manual	 4-1 09/28/00 
infractions, such as late reports, give monitoring staff greater flexibility in 

addressing the violation. 

GOOD PRACTICES: 

•	 Identify problems early and work with owners to 

correct small infractions before they grow into 

serious violations. 

•	 Provide prompt technical support to remedy 

procedural errors. 

•	 Be consistent across owners and properties in 

citing problems. 

If an owner still fails to comply after the agency has taken all reasonable 

enforcement measures, the monitoring staff may turn the case over to FDIC for 

further enforcement action. Monitoring agencies also may charge an additional 

administrative fee to cover the costs associated with monitoring non-complying 

properties (see Section 4.4). 

4.2 NOTIFYING OWNERS OF COMPLIANCE VIOLATIONS 

Once monitoring staff have determined that a compliance violation has 

occurred, the agency must send a Notice of Non-Compliance to the owner. 

Timely notice will help ensure that owners address problems promptly. 

A. Timing of Notices 

There are three ways monitoring staff will detect compliance violations. 

Most violations will be discovered when monitoring staff: 

0	 review reports and other materials submitted by an owner; 

0	 conduct on-site reviews; or 

0	 receive occasional reports from informal sources (i.e., tenant complaints, 

information provided by other public officials, such as social service 

workers or local housing authority staff, etc.). 

To ensure that owners are promptly informed of violations, monitoring staff 

should issue Notices of Non-Compliance within 30 days of receiving information 

leading to the non-compliance determination. 

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B. Preparing the Notice 

All Notices of Non-Compliance should be addressed directly to the 

owner and must contain the following items: 

0 the name and address of the property;
 

0 the name of the owner;
 

0 the monitoring number used to identify the property (if any);
 

0 the date of the notice; and
 

0 the type of violation.
 

Notices must not only inform the owner of the violation, but also advise the 

owner about what must be done to correct the problem. In preparing a Notice 

of Non-Compliance, monitoring staff must also: 

0 identify the corrective actions the owner must take to restore compliance;
 

0 set a deadline for completing the corrective actions;
 

0 state the additional administrative fee the owner must pay;
 

0 indicate the consequences for failing to meet the corrective action
 

deadline; and 

0 give the name and phone number of the monitoring person to contact 

with any questions regarding the notice. 

GOOD PRACTICES: 

•	 Prepare notices on agency stationery. 

•	 Have notices signed by senior staff (e.g., 

Director of Compliance Monitoring). 

•	 The management agent for the property 

should also receive a copy of the notice. 

•	 Transmit notices using delivery methods that 

provide a time and date stamp (e.g., express 

delivery, registered mail). 

•	 Notices sent by facsimile are okay, but agency 

should send original by registered mail. 

Specific information on the required corrective actions and corrective action 

deadlines for different types of violations can be found in the following section. 

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Notices of Non-Compliance should be placed in each property's 

monitoring file and in a central agency file. Maintaining a central file of owner 

violations will help monitoring staff quickly and accurately prepare the summary 

of owner violations for inclusion with the annual monitoring report to FDIC. The 

central file of violations must be maintained at all times and be kept available for 

review by staff of FDIC or other authorized federal agencies. 

4.3	 CORRECTIVE ACTIONS TO RESTORE COMPLIANCE 

As noted above, when an agency issues a Notice of Non-Compliance, it 

must specify the corrective actions the owner must take to restore the property 

compliance. The corrective actions and the corrective action deadline for most 

types of compliance violations are specified below. The information is 

presented by type of violation and grouped in four major categories. 

TYPES OF COMPLIANCE VIOLATIONS 

•	 Occupancy Violations 

•	 Rent Limit Violations 

•	 Reporting and Documentation
 

Violations
 

•	 Administrative Fee Violations 

If monitoring staff encounter a violation not specifically listed, they should 

attempt to identify a comparable violation listed below. Where a comparable 

violation exists, the agency is authorized to take the corrective actions for the 

violation listed and adapt them to correspond to the violation at hand. 

If no comparable violation can be identified, monitoring staff should issue 

a Notice of Non-Compliance advising the owner to stop all actions causing the 

compliance violation. The agency should then request guidance from FDIC 

regarding the corrective actions that should be taken. If FDIC fails to provide 

guidance within 60 days, the agency may turn the case over to FDIC. 

A.	 Occupancy Violations 

Exhibit 4-2 provides guidance on the corrective actions and corrective 

action deadlines for violations where an owner has failed to follow the program's 

occupancy requirements. There are three types of occupancy violations. 

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OCCUPANCY VIOLATIONS 

•	 Owner Failed to Maintain Required Number of 

QUs 

•	 Owner Failed to Rent VLI-QUs as Required 

•	 QU Designation Removed from Eligible Tenant 

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EXHIBIT 4-2
 

OCCUPANCY VIOLATIONS - CORRECTIVE ACTIONS
 

VIOLATION CORRECTIVE ACTIONS 

CORRECTIVE ACTION 

DEADLINE 

1. Owner Failed to Maintain the • Owner must follow the appropriate Next Available Unit Must implement corrective action 

Required Number of QUs (NAU) procedures described in Exhibit 2-5 of this manual 

until the required number of QUs is obtained. 

• Owner must submit monthly occupancy reports to 

monitoring agency until compliance is restored. 

• Owner must submit a completed certification of compliance 

form once the required number of QUs is obtained. 

until number of QUs meets the Total 

Set-Aside for the property. 

2. Owner Failed to Rent Available • Owner must follow the appropriate NAU procedures Must implement corrective action 

QUs to VLI tenants to restore described in Exhibit 2-5 until the VLI Set Aside is obtained. until number of QUs meets the VLI 

required number of VLI—QUs 

• Owner must submit monthly occupancy reports to 

monitoring agency until compliance is restored. 

• Owner must submit a completed certification of compliance 

form once the required number of VLI—QUs is obtained. 

Set-Aside for the property. 

3. QU Designation Removed from 

Eligible Tenant 

• Owner must restore QU designation to the original 

household. (Note: QUs may exceed the required number.) 

• If the rent for the affected unit was raised above the 

appropriate rent limit, the owner must return the excess 

rent by following Rent Limit Violation B.1. 

• Owner must submit a copy of the lease or current rental 

agreement for the affected unit showing that the rent 

complies with the appropriate rent limit. 

Within 30 days of the Notice of NonCompliance. 

6 
B. Rent Violations 

Exhibit 4-3 provides guidance on the corrective actions and corrective 

action deadline when an owner has failed to keep the rents charged for QUs 

within the applicable rent limits. 

RENT VIOLATION 

• QU Rent Exceeds Maximum Rent 

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EXHIBIT 4-3
 

RENT LIMIT VIOLATION - CORRECTIVE ACTIONS
 

VIOLATION CORRECTIVE ACTIONS 

CORRECTIVE ACTION 

DEADLINE 

1. Qualifying Unit Rent Exceeds 

Appropriate Limit 

• Owner must reduce the rents for the affected units to the 

allowable rent limit. 

• Owner must calculate the amount of excess rent received 

from the tenant. 

• Owner must apply overpayment as a rent credit toward 

next month's rent for unit. If overpayment exceeds next 

month's rent, any excess must be repaid to tenant by 

check. 

• If the tenant has moved out, the full amount of the 

overpayment must be mailed to the tenant. If the tenant 

cannot be located, the overpayment must be paid to the 

monitoring agency for use in providing housing assistance 

to lower-income families. 

• Owner must send letter to tenant by registered mail 

announcing revised unit rent. The letter must also indicate 

the amount of the rent credit awarded and indicate any 

repayment to the tenant. 

• Owner must send copy of tenant letter with the return 

receipt to monitoring agency prior to the compliance 

deadline. 

Within 30 days of the date of the 

Notice of Non-Compliance 
C. Reporting Violations 

Exhibit 4-4 provides guidance on the corrective actions and corrective 

action deadlines for violations where an owner has failed to follow the program's 

reporting requirements. There are five types of reporting violations. 

REPORTING VIOLATIONS 

•	 Owner Failed to Submit Monthly Compliance 

Report 

•	 Owner Failed to Submit Annual Compliance 

Report 

•	 Owner Failed to Obtain TIC 

•	 Owner Failed to Obtain Tenant Recertification 

•	 On-Site Tenant File Incomplete 

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EXHIBIT 4-4
 

REPORTING VIOLATIONS - CORRECTIVE ACTIONS
 

VIOLATION CORRECTIVE ACTIONS 

CORRECTIVE ACTION 

DEADLINE 

1. Owner Failed to Submit 

Monthly Compliance Report 

• Owner must submit properly completed Monthly 

Compliance Report by corrective action deadline 

Within 10 days of the Notice of NonCompliance. 

2. Owner Failed to Submit Annual 

Compliance Report 

• Owner must submit properly completed Annual 

Compliance Report by corrective action deadline 

Within 30 days of the Notice of NonCompliance. 

3. Owner Failed to Obtain a • Owner must obtain a completed tenant income certification Within 30 days of the Notice of NonTenant Income Certification or 

Proper Income Verification • Owner must submit copies of the outstanding documents to Compliance. 

Prior to Move-in the monitoring agency by the corrective action deadline. 

• If the tenant is over-income and the property now lacks the 

required number of QUs, the owner must follow the 

corrective actions listed for Occupancy Violation No. 1. 

4. Owner Failed to Obtain a • Owner must obtain a completed tenant income Within 30 days of the Notice of NonTenant Income Recertification recertification Compliance 

by Required Date 

• Owner must submit copies of the outstanding documents to 

the monitoring agency by the corrective action deadline. 

• If the documents show that the tenant is over-income, the 

owner must follow the appropriate NAU procedures in 

section 2.5.B to obtain the required number of QUs. 

5. Owner Failed to Maintain • Owner must obtain all documentation necessary to Within 30 days of the Notice of NonProper On-Site Tenant Files complete the tenant files. 

• Owner must submit copies of the outstanding documents to 

the monitoring agency by the corrective action deadline. 

Compliance 
D. Monitoring Fee Violations 

Exhibit 4-5 provides guidance on the corrective action and corrective 

action deadline when an owner fails to pay the required annual monitoring fee 

to the monitoring agency by the start of the monitoring year. 

FEE VIOLATION 

• Owner Failed to Pay Monitoring Fee 

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EXHIBIT 4-5
 

MONITORING FEE VIOLATION - CORRECTIVE ACTIONS
 

VIOLATION CORRECTIVE ACTIONS 

CORRECTIVE ACTION 

DEADLINE 

1. Owner Fails to Pay Annual 

Monitoring Fee by the Required 

Date 

• Owner must pay annual monitoring fee to agency Within 30 days after the date of the 

Notice of Non-Compliance. 
4.4 ADMINISTRATIVE FEE FOR NON-COMPLIANCE 

As discussed in Chapter 2, if a property is determined to be out of 

compliance, the monitoring agency may charge the owner an additional 

administrative fee. This fee is in addition to, and distinct from, the annual 

monitoring fee. 

The maximum fee for non-compliance is equal to the amount of the 

annual monitoring fee. During a given monitoring year, once the agency has 

assessed the maximum amount of the additional fee, no further fees for noncompliance can be charged until the next monitoring year. This limitation 

applies even if the owner commits another violation during that same monitoring 

year. 

The agency may require the owner to pay some or all of the allowed fee 

for non-compliance. FDIC encourages agencies to consider charging an 

amount less than the maximum fee in cases where the violation will not require 

extensive additional monitoring. For example, an agency's on-site review may 

reveal that the owner has two recertifications that are three weeks overdue, but 

otherwise the property is in compliance. If the owner agrees not to rent any 

vacant units until the recertifications have been performed and submitted to the 

agency, monitoring staff should consider charging the owner only a small noncompliance fee. 

The LURA allows the agency to charge the additional fee for up to three 

years after the most recent finding of non-compliance. This means that the 

agency may charge additional fees up to the maximum for three monitoring 

years -- the current year and two additional monitoring years (i.e., Year 1, Year 

2, and Year 3). If the owner commits another violation the following year (Year 

2), then the agency may charge the fee during an additional monitoring year 

(Year 4). 

Finally, if judicial enforcement action is necessary to compel an owner to 

restore compliance, the provisions of the LURA allow the agency or FDIC to 

require the owner to pay for all costs and legal fees incurred as a result of these 

efforts. Owners may be required to pay these costs even if judicial 

enforcement action is not actually undertaken or is unsuccessful. 

4.5 AGENCY FOLLOW-UP 

To help ensure that owners work to restore compliance with program 

requirements, monitoring agencies should take several follow-up actions after a 

Notice of Non-Compliance has been issued. They are: 

AHP Compliance Monitoring Manual 4-13 09/28/00 
0 confirm that the owner received the non-compliance notice; 

0	 maintain regular contact during the corrective action period; 

0	 provide any technical support necessary for owner to implement
 

corrective actions;
 

0	 review reports of owner progress; and 

0	 re-evaluate owner compliance at the end of the corrective action period. 

In taking follow-up action, FDIC strongly encourages the agency to adopt 

the approach of working with owners and their staff to bring the property back 

into compliance so that it continues to serve families in need of affordable 

housing. By taking steps such as putting owners in touch with affordable 

housing organizations who can refer LI and VLI tenants, or making a technical 

assistance visit to work with on-site staff to find ways to prevent recurring errors, 

monitoring staff can help an owner work toward restoring compliance. 

A. Confirming Owner Receipt of Notice 

After a Notice of Non-Compliance has been issued, monitoring staff 

should attempt to contact the owner to confirm that he or she has received the 

notice and understands its contents. When contact is made, monitoring staff 

should: 

0	 review the contents of the notice; 

0	 confirm that the owner understands the violation and the corrective 

actions to be taken; 

0	 highlight the corrective action deadline and make sure it is clear to the 

owner that compliance must be restored by this date; 

0	 discuss whether there is a need for technical assistance or training in 

order to restore compliance; 

0	 schedule a meeting or a follow-up call if the owner indicates that it will be 

impossible to restore compliance by the deadline; 

0	 confirm the date the owner will submit the first corrective action report (if 

appropriate); and 

0	 inform the owner that monitoring staff will be making periodic follow-up 

calls to check progress and answer questions. 

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Any problems or issues identified during the follow-up call must be 

documented in the property monitoring file and, if appropriate, brought to the 

attention of the staff person in charge of monitoring. For example, if the owner 

indicates that it will be impossible to meet the corrective action deadline, the 

staff person making the call should inform senior monitoring staff and discuss 

whether the reasons given by the owner may warrant extending the corrective 

action deadline. 

FDIC recommends that all attempts and any contact be documented in 

the property's monitoring file. 

GOOD PRACTICE: All contacts with the owner should 

be documented in the property's monitoring file. 

B. Maintaining Regular Contact 

Experienced compliance monitors emphasize the importance of staying 

in regular contact with property owners and managers. Regular contact 

reminds owners that the monitoring agency is tracking progress in correcting the 

violation, and sends a clear message that the agency expects compliance to be 

restored. 

GOOD PRACTICE: Placing a reminder call to the 

owner/manager as the end of the corrective action 

period nears can help ensure that all necessary actions 

are completed on time. 

Regular contact provides a way for the agency to anticipate problems. 

When monitoring staff make periodic phone calls to check on progress, they 

give owners and their staff a ready opportunity to ask questions they might have 

hesitated to call the agency about. Answering these questions may help 

prevent errors because the owner or manager did not understand a particular 

procedure. For example, in areas where market rents have only recently risen 

above the rent limits, on-site staff may find it hard to adjust to using three rent 

levels (very low, low and unrestricted) for a given unit size. 

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C. Providing Technical Assistance 

In many cases, compliance violations occur because owners or their 

staff have insufficient knowledge of program requirements and procedures. 

Because high turnover is common among property management staff, violations 

may occur when the on-site personnel who attended the agency's most recent 

compliance training have been replaced by staff who are unfamiliar with the 

program. For example, new staff who have not been adequately introduced to 

the required procedures may have unknowingly rented QUs to over-income 

families. 

During the follow-up call to confirm that the owner received the notice, 

monitoring staff should inquire about the circumstances that led to the violation 

and assess whether technical support will be needed for the owner to 

successfully implement the required corrective actions. 

If the information provided by the owner suggests that assistance to 

clarify program requirements and procedures will be needed to assure 

successful implementation of the required corrective actions, monitoring staff 

should determine the type of technical support that is needed. 

TYPES OF TECHNICAL SUPPORT 

• Technical assistance over the phone 

• AHP Video lending 

• AHP Compliance Workshops 

• A special training session 

• On-site technical support 

• Some combination of the above 

The following examples illustrate when a particular type of assistance is most 

appropriate. 

¤	 Technical Assistance by Phone. If the case involves a small property run 

by a single manager who is new to the position, monitoring staff may be able 

to provide the necessary guidance regarding the program during several 

phone calls. In deciding whether technical assistance by telephone provides 

adequate support, monitoring staff should confirm that technical support by 

AHP Compliance Monitoring Manual	 4-16 09/28/00 
phone, together with the written program materials for owners, will provide 

sufficient guidance to enable managers to operate their properties 

effectively until they can attend the next training session. 

¤	 AHP Video. FDIC has produced and will distribute a half-hour video that 

provides an overview of AHP Compliance requirements. While it does not 

provide the detail of a full training session, it is a good overview for new 

property management staff and owners who have not been able to attend a 

full training. Since a limited number of copies are being provided to the 

monitoring agencies, a video lending system is recommended. 

¤ AHP Compliance Workshops. FDIC has designed and tested a one-day 

workshop in AHP compliance procedures for owners and managers. This 

workshop has been documented in a full course curriculum package -- 

complete with Instructor’s Guide, overhead transparencies, practice 

activities, and handouts -- which is available to monitoring agencies for use

 by agency staff in general compliance workshops. It is recommended that 

this course be implemented on a regular basis (e.g., quarterly or annually) 

for new owners and managers and those who need refresher training. 

¤	 Special Training Session. In a case that involves a larger property with 

several new management staff, monitoring staff should schedule a special 

training session if: 

0	 the next training is several months away; and 

0	 current members of the management staff have insufficient experience 

with the program to provide effective guidance on how to comply with the 

requirements and procedures. 

¤	 On-site Technical Support. If the information provided by the owner 

indicates that the compliance problem is due to weaknesses in the 

management and reporting system used by on-site personnel, monitoring 

staff should visit the property, assess the problem, and recommend 

improvements. 

¤	 Combined Activities. If a property has new management staff and 

weaknesses in the on-site management and reporting system, monitoring 

staff may need to provide both training and on-site technical support. In 

such a case, monitoring staff might opt to schedule a visit to the property to 

perform both the training and management assessment. 

D. Reviewing Monthly Compliance Reports 

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When a property is out of compliance with the program's occupancy 

requirements, the corrective actions require that the owner submit monthly 

compliance reports to document that on-site staff are following the required 

procedures for restoring the number of QUs. 

In reviewing the compliance reports, monitoring staff should ensure that 

owners are following the required procedures when renting the next available 

units. Again, the specific procedures owners must follow when renting 

available units will depend on whether the number of QUs: 

0	 fails to meet the Total Set-Aside; or 

0	 satisfies the Total Set-Aside, but the number of VLI-QUs fails to comply 

with the VLI Set-Aside. 

Properties that Fail to Meet the Total Set Aside 

If an agency has determined that a property no longer meets the 

required number of QUs established in the LURA, owners must restore the 

number of QUs by renting each unit that becomes available for occupancy to a 

lower income tenant until the required number of QUs is reached. 

If the number of VLI-QUs meets the required number, owners may rent 

available units to a lower or very low-income household. However, if the 

number of VLI-QUs is less than the required amount, owners must give 

preference to VLI households when renting available units. 

Properties that Meet the Total Set Aside But not the VLI Set-Aside 

During the agency's ongoing compliance monitoring activities, monitoring 

staff may determine that a property meets the Total Set-Aside, but the owner 

has failed to follow the procedures for maintaining the number of VLI-QUs. To 

correct this violation, owners must rent the next available QU to a VLI household 

until the required number of VLI-QUs is reached. 

E. Re-Evaluating Owner Compliance 

Owners must implement the required corrective actions by the deadline 

specified in the Notice of Non-Compliance or face additional penalties and 

enforcement actions. At the end of the corrective action period, monitoring 

agencies must assess whether an owner has taken the necessary actions to 

restore compliance and determine if further enforcement action is needed. 

When the corrective action deadline is reached, monitoring staff must: 

AHP Compliance Monitoring Manual	 4-18 09/28/00 
0	 check that the owner has submitted all required items (e.g., reports, 

letters, corrected tenant income documents); 

0	 review owner submissions to assure that all corrective actions have been 

implemented; and 

0	 confirm that the owner has provided a certification of compliance. 

The results of the review must show that all corrective actions have been taken 

before monitoring staff can make a determination that compliance has been 

restored. If the owner has failed to take all required corrective actions, the 

property must still be considered out of compliance. 

GOOD PRACTICE: In cases where the property was out of 

compliance with the program's occupancy requirements, 

monitoring staff should also conduct an on-site visit once the 

owner has restored compliance. This will allow the agency to 

confirm that the requirements have been met and that on-site 

staff are following proper procedures. 

Adequacy of Owner Submissions 

To confirm that all required materials have been received, monitoring 

staff should compare the items received to the items requested in the agency's 

Notice of Non-Compliance to the owner. If all the materials listed in the notice 

have been received, the owner has met this condition. 

Implementation of Corrective Actions 

After confirming that all the required documents have been received, 

monitoring staff must review each corrective action listed in the Notice of NonCompliance and assess whether the owner has properly carried out each 

action. The documentation submitted by the owner during the corrective action 

period should enable monitoring staff to make this determination. 

Owner Certification of Compliance 

Owners must also submit a certification that the property once again 

complies with the program's requirements. Owners must use the form included 

in Appendix I or a comparable form approved by the agency. Monitoring staff 

must review the certification to confirm that it has been properly signed. 

Owners Who Successfully Restored Compliance 

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If the results of the agency review show that the compliance violation 

has been corrected and all required actions have been taken, monitoring staff 

must send a letter informing the owner of the agency's determination that the 

property is now in compliance with program requirements. 

For minor violations, such as an overdue report, the letter need only 

acknowledge that the problem was corrected. For violations involving more 

extensive corrective action measures, the letter must acknowledge the 

successful completion of the required corrective actions. 

Owners Who Failed to Restore Compliance 

If the results of the agency review show that the owner has failed to take 

all of the required corrective actions and therefore remains out of compliance, 

monitoring staff should assess whether the owner made a good faith effort to 

restore compliance. In some cases, circumstances beyond the owner's control 

may have made it impossible to correct the violation by the deadline. 

The presence of these circumstances may warrant extending the 

corrective action deadline. Such an extension would give an owner additional 

time to complete the required corrective actions and postpone the enactment of 

additional penalties or enforcement actions. 

If the owner failed to implement the required corrective actions and the 

monitoring agency determines that there are no circumstances that warrant an 

extension, then the agency must initiate the enforcement actions outlined in 

Section 4.6. 

4.6 ENFORCING COMPLIANCE 

When an owner fails to address compliance violations during the 

corrective action period, monitoring agencies must take additional enforcement 

measures to compel owners to restore compliance. 

A. Possible Enforcement Actions 

Once the corrective action deadline has passed, monitoring agencies 

may institute any of the following administrative actions. 

a) Penalize Owner's Applications for Other Forms of Assistance. The 

agency can institute a system of penalty points for owners who are out of 

compliance. If these owners apply for other forms of assistance through the 

agency, the agency could take a specified number of points off their 

application for failing to restore compliance. For example, the penalty 

points might count against an owner's application for tax credits or financing 

funded by mortgage revenue bonds. 

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b)	 Notify Other Agencies Administering Housing Assistance. The agency 

can also take the step of advising other agencies of the owner's compliance 

violation. Notices could be sent to state community affairs agencies, bond 

issuers, or local governments. 

c)	 Place a Notice in the State Register. This action involves entering a 

notice in the state register of public actions and announcements that 

administrative and/or legal action is pending against the owner. Such a 

notice often makes an owner's compliance violation well known in the 

community. 

d)	 Notify the Owner's Limited Partners or Parent Institution of the 

Compliance Violation. The agency can inform an owner's partners or 

affiliated institution of the violation and recommend that they take steps to 

have the managing owner address the problem. 

e)	 Notify the Owner's Lender of the Compliance Violation. The agency 

could send a notice to the lender for the property, reporting the owner's 

compliance violation and lack of action to correct the problem. 

f)	 Notify the Owner that the Agency/FDIC Plans to Initiate Judicial Action 

to Appoint a Receiver. In this case, the agency would send a notice to the 

owner indicating that the agency or FDIC will begin steps to have a receiver 

appointed by the court if the owner does not take corrective action by a 

prescribed deadline. 

B. Selecting Enforcement Measures 

The first three actions (a through c) listed above are considered 

moderate enforcement measures. The last three actions (d through f) should 

be viewed as severe measures. 

In selecting the type of measure to use when an owner has failed to 

respond to a Notice of Non-Compliance, monitoring staff should consider the 

nature of the violation and the owner's response to the notice. 

If the violation is not severe and the owner has made some effort to 

address the problem, a moderate enforcement measure may be appropriate. 

For example, if the owner's violation is repeated late reports and he or she has 

shown some improvement, an agency might consider instituting a penalty for 

applications for other types of assistance from the agency, or placing a notice in 

the state register. 

If the violation is more severe or the owner has taken little or no action to 

correct the violation, the agency should use a severe measure. For example, if 

the owner has failed to pay the annual monitoring fee or has repeatedly counted 

AHP Compliance Monitoring Manual	 4-21 09/28/00 
units occupied by over-income tenants as QUs, the agency might notify the 

lender of the violations and the owner's failure to take proper corrective action. 

In selecting measures, agencies may choose to implement several 

administrative actions if necessary. 

C. Continued Non-Compliance 

If an owner has failed to take the necessary steps to restore compliance 

within 60 days of the Notice of Non-Compliance, the agency may initiate judicial 

enforcement actions. These actions could include: 

0 filing suit to force the owner to take corrective action; 

0 filing suit for disgorgement of excess rent collected by owner; 

0 filing suit to appoint a receiver for the property; and 

0 filing suit to collect outstanding fees. 

The monitoring agency should notify FDIC prior to initiating judicial action 

against an owner. 

After 60 days of continued non-compliance, if an agency has issued a 

second notice to the owner and taken administrative action to compel the owner 

to take corrective action, the monitoring agency may, at its discretion, turn the 

case over to FDIC. If an agency chooses to pass a case to FDIC, monitoring 

staff must make available all agency files regarding the property to FDIC or its 

designated agent. FDIC, or its representatives, may also call on monitoring 

staff to answer questions about the case and testify during legal proceedings, if 

necessary. 

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