termination in writing and signed by the Director shall be mailed to the last known address of the interested person or firm by registered mail, return receipt requested.

§ 200.192 Hearing, request.

Any person or firm that has been notified of a proposed determination is entitled to request an opportunity to be heard and to be represented by counsel. Any such request shall be made in writing addressed to the Director of the Office from which it was received. The letter to the Director may also include a request for written notice specifying charges in reasonable detail. The request for an opportunity to be heard shall be made within ten days from the date of receipt of notice of the proposed determination. If at the end of such ten-day period, no request has been received, the Director may assume that an opportunity to be heard is not desired, and may proceed in the manner provided in § 200.194 to notify the interested person or firm of his determination. § 200.193 Hearing, time and place.

Upon receipt of a request for an opportunity to be heard, the Director shall arrange a timely hearing. Notice of the time and place of such hearing shall be in writing, transmitted by registered mail, return receipt requested, and shall include a statement indicating the informal nature of the proceedings and their purpose.

After the person or firm against whom action is proposed has been afforded an opportunity to be heard, the Director shall make his determination on the preponderance of the evidence. The Director shall obtain the approval of the Commissioner before making a final determination withdrawing the approval of an approved mortgagee or terminating a lender's insurance contract under Title I of the Act. Notice of such determination shall be made in writing, signed by the Director, and transmitted by registered mail, return receipt requested. The Director's determination shall be final and conclusive.

$ 200.195 Rescission and reinstatement.

Any person or firm debarred from the benefits of participation may in writing request reinstatement. The procedures for reinstatement are substantially similar to those invoked in the initial

proceedings. In reaching his determination regarding reinstatement the Director must be satisfied that the original wrongful act has been righted and also be persuaded from the assurances of the party concerned that he understands the requirements of the statutes and the administrative rules and regulations and that he will comply with them in the future. When a debarment has been rescinded a report thereof is forwarded to Headquarters Office in Washington, D.C., and the party reinstated receives a notice of such reinstatement.

UNSATISFACTORY RISK DETERMINATION § 200.200 Basis of action.

Any Field Office Director may reject an application for mortgage insurance on the grounds of unsound credit or unsatisfactory past experience. Applications will be rejected where past experience with the proposed borrower, builder or other participant in the mortgage transaction indicates that his previous conduct or method of doing business has been such that his participation in the transaction would make it unacceptable from the underwriting standpoint of an insurer. The Unsatisfactory Risk Determination action is usually temporary in nature and may be followed in aggravated cases by the application of section 512 procedures as set forth in § 200.190 et seq.

§ 200.201

Invitation to conference.

The purpose of the application of Unsatisfactory Risk Determination procedure is to obtain a correction of the conditions giving rise to the administrative action. Accordingly, a person against whom administrative action is being considered is usually extended an invitation to discuss the matter with the Director looking toward corrective action on the part of those involved. Such an invitation is not extended if action is taken during investigation or pending court proceedings.

§ 200.202 Determination notice.

When it is determined that a person is an unsatisfactory risk, the Director will notify such person by sending a registered letter to his last known address, stating the date on which such Unsatisfactory Risk Determination is effective, a brief informal statement of the reasons for the same, and the name of the individual firm, its officers and principal stockholders.

Reinstatement of persons and firms whose applications or requests have been rejected under Unsatisfactory Risk Determination procedure is within the discretion of the Director. The Director may entertain any proposal whereby the persons or firms affected make arrangements which will correct the conditions leading to the original determination. The arrangements for corrective action include proper assurances of future compliance in specified matters and agreement to abide by all applicable FHA regulations. Satisfactory corrective action having been taken the Unsatisfactory Risk Determination is rescinded and withdrawn and the persons and firms are reinstated.

§200.205 Basis of action.

In order to protect homeowners and to avoid increased insurance risks, the Field Office Director will assist lending institutions in their efforts to supervise and control the activities of dealers and salesmen originating mobile home and property improvement loans where there are involved irregularities or disregard for the statute and regulations. The Director will determine the corrective action appropriate in the circumstances. 35 F.R. 5322, Mar. 31, 1970]

$200.206 Inquiry notice and explanation.

Upon receipt of information indicating unscrupulous and unethical practices or other conduct that tends to unduly increase insurance risks on the part of a dealer or salesman, the Director will arrange for a prompt inquiry by a member of his staff. After the inquiry, the dealer or salesman is informally advised in writing of the proposed determination by the Director. The dealer or salesman may then request an opportunity to give his version of the surrounding circumstances and answer or explain any derogatory charges or allegations made in connection with his mobile home or property improvement loan operations. [35 F.R. 5322, Mar. 31, 1970]

$ 200.207 Determination.

When it has been determined that precautionary measures are to be instituted against a dealer or salesman the Director submits a recommendation to that effect to the Headquarters Office in Washington, D.C., for consideration. If the recommendation is approved the

dealer, salesman, insured institution, lending institution and insuring offices will be so advised.

§ 200.208 Rescinding actions.

The Director may rescind precautionary measures actions if he has satisfied himself that the dealer or salesman can and will conduct his future operations in accordance with the letter and spirit of the Act and the Title I regulations. The Director will forward his recommendation regarding any rescission to Headquarters Office in Washington, D.C., which will mail the rescission letter to all who received the original precautionary letter.

Subpart -Nondiscrimination and Equal Opportunity in Housing and Group Practice Facilities

§ 200.300

Nondiscrimination policy.

The regulations in this subpart are prescribed pursuant to the provisions of Executive Order 11063, issued by the President under date of November 20, 1962, and are designed to assure compliance with the established policy of the United States that housing or related facilities and group practice facilities financed with assistance under the provisions of the National Housing Act will be made available for use without discrimination based on race, color, creed, or national origin.

[32 F.R. 6570, Apr. 28, 1967]

§ 200.305 Notice to public.

Participants in insurance programs of the Federal Housing Administration shall be informed of the established policy on nondiscrimination and equal opportunity in housing and in group practice facilities through all appropriate means and as early as possible in their negotiations or upon indicating interest in the sponsorship or financing of housing, related facilities, and group practice facilities.

[32 F.R. 6570, Apr. 28, 1967] § 200.310

Definition of "discriminatory

practice".

As used in this subpart, the term "discriminatory practice" shall mean any discrimination because of race, color, creed, or national origin in lending practices or in the sale, rental, or other disposition of residential property or related facilities and group practice facilities, or in the use or occupancy thereof, if:

(a) Such property is or will be constructed, rehabilitated, purchased or flnanced with the proceeds of a loan or investment insured under the provisions of the National Housing Act pursuant to an application for mortgage insurance received by the Commissioner after November 20, 1962; or

(b) Such property is offered for sale under terms which include financing under the provisions of the National Housing Act pursuant to an application for mortgage insurance received by the Commissioner after November 20, 1962;

or

(c) Such property is improved with a loan reported for insurance under Title I of the National Housing Act, the proceeds of which are disbursed after November 20, 1962; or

(d) Such property is owned by the Federal Housing Administration.

[27 F.R. 11802, Nov. 30, 1962, as amended at 27 F.R. 12126, Dec. 7, 1962; 32 F.R. 6571, Apr. 28, 1967]

§ 200.315 Prohibition against discriminatory practice.

No person, firm, or other entity receiving the benefits of Federal Housing Administration mortgage insurance or doing business with the Federal Housing Administration shall engage in a "discriminatory practice" as such term is defined in this subpart.

[34 F.R. 11091, July 1, 1969]

§ 200.320 Subdivision report and multifamily, land development, and group practice facilities preapplication analysis.

All requests for a subdivision report under home mortgage procedures or requests for preapplication analysis of multifamily, land development, and of group practice facilities projects, shall be accompanied by a statement of the applicant in which he agrees to comply with the regulations in this subpart. The statement shall be in a form satisfactory to the Commissioner.

[32 F.R. 6571, Apr. 28, 1967]

the Commissioner exercises controls over rentals or methods of operation of mortgagors participating in the programs of the Federal Housing Administration shall contain provisions requiring compliance with the regulations in this subpart.

[32 F.R. 6571, Apr. 28, 1967]

§ 200.335 Provisions in legal instru

ments.

Contracts and other instruments of the nature described in §§ 200.310 through 200.330 shall contain provisions to the effect that failure or refusal to comply with the regulations in this subpart shall be a proper basis for future rejection of applications and refusal by the Federal Housing Administration to enter into contracts with or insure loans involving persons, firms or other entities identified with such failure and refusal.

[27 F.R. 11802, Nov. 30, 1962] § 200.340

Complaints and hearings.

(a) Upon receipt of a written complaint signed by the complainant to the effect that any person, firm or other entity has engaged in a discriminatory practice, such person, firm or other entity shall be invited to discuss the matter in an informal hearing with the Field Office Director or his designee having jurisdiction.

(b) If the existence of a disciriminatory practice is denied by the person, firm or other entity against which a complaint has been made, the Field Office Director or his designee shall conduct such inquiries and hearings as may be deemed appropriate for the purpose of ascertaining the facts.

(c) If it is found that the person, firm or other entity against which a complaint has been made has not engaged in a discriminatory practice, the parties concerned shall be so notified.

(d) If it is found that there has been a violation of the regulations in this subpart, the person, firm or other entity in violation shall be requested to attend a conference for the purpose of discussing the matter. Failure or refusal to attend such a conference shall be proper basis for the application of sanctions.

(e) The conference arranged for discussing a violation shall be conducted in an informal manner and shall have as its primary objective the elimination

Failure or refusal to eliminate a discriminatory practice or to give satisfactory assurances of future compliance with the requirements of this subpart shall be proper basis for applying sanctions. In the case of discrimination involving lending practices, the sanction may include the withdrawal of the lender's approval as a mortgagee. other cases the sanctions may take the form of placing the offender's name on an ineligible list. Applications for mortgage insurance shall be rejected as ineligible if any person, firm or other entity included on the ineligible list is identified in any manner with the proposed transaction.

[27 F.R. 11802, Nov. 30, 1962]

In

$ 200.350 Appeals from findings of Field Office Directors.

Upon written application, a complainant or a person, firm or other entity against which a complaint has been filed under the regulations may apply to the Commissioner for a rehearing or a readjudication of the action taken by the Field Office Director. Upon receiving such application, the Commissioner may designate a representative to conduct a hearing and to make a report of findings. The Commissioner may, after a review of the record on appeal, reverse an action taken by the Field Office Director.

[27 F.R. 11803, Nov. 30, 1962] $200.355

Reinstatement.

Reinstatement of restricted persons, firms or other entities shall be within the discretion of the Commissioner and under such conditions as he may prescribe.

[27 F.R. 11803, Nov. 30, 1962]

Subpart J-Equal Employment
Opportunity

SOURCE: The provisions of this Subpart J appear at 33 F.R. 16408, Nov. 8, 1968, unless otherwise noted.

(a) In any mortgage or loan insurance transaction under this chapter where the Commissioner will control the mortgagor either through the ownership of corporate stock or under the provisions of a regulatory agreement, the term "applicant" as used in § 200.415 shall mean the mortgagor.

(b) In any transaction other than one specified in paragraph (a) of this section, the term "applicant" as used in § 200.415 shall mean the developer, or the builder, dealer or contractor performing the construction, repair or rehabilitation work for the property owner.

§ 200.415

Agreement of applicant.

An applicant shall, prior to the Commissioner's issuance of any commitment or other loan approval, agree (in a form prescribed by the Commissioner) that there shall be no discrimination against anyone who is employed in carrying out work receiving assistance pursuant to this chapter, or against an applicant for such employment, because of race, color, religion, sex or national origin. [34 F.R. 6183, Apr. 5, 1969]

§ 200.420 Equal opportunity clause to be included in contracts and subcontracts.

(a) The equal opportunity clause prescribed by the Commissioner pursuant to the regulations of the Secretary of Labor (41 CFR Ch. 60) shall be included in each nonexempt contract and subcontract for work receiving FHA assistance.

(b) Subcontracts less than $50,000 may incorporate by reference the equal opportunity clause.

(c) The equal opportunity clause shall be deemed to be a part of each nonexempt contract or subcontract whether or not it is physically incorporated in such contract.

§ 200.425 Exemptions.

(a) Transactions of $10,000 or under. Contracts and subcontracts not exceeding $10,000 are exempt from the requirements of the equal opportunity clause. No contractor or subcontractor shall procure supplies or services in less than usual quantities to avoid applicability of the equal opportunity clause.

(b) Contracts and subcontracts for indefinite quantities. Contracts and subcontracts for indefinite quantities are exempt from the requirements of the equal opportunity clause if the amount to be ordered in a single year under any such contract will not exceed $10,000.

(c) Work outside the United States. Contracts and subcontracts with regard to work performed outside the United States by employees who were not recruited within the United States are exempt from the requirements of the equal opportunity clause.

Other

(d) Others. exemptions set forth in the regulations of the Secretary of Labor at 41 CFR 60-1.5 apply to transactions under this subpart.

§ 200.502 Application for assistance.

An application for assistance in the correction of structural defects, in form satisfactory to the Commissioner, shall be filed by a mortgagor under an FHAinsured mortgage with the Field Office Director having jurisdiction over the area in which the property is located. The application shall be filed not later than four years after the date of the first mortgage insurance certificate issued in connection with the property. A mortgagor under a new FHA mortgage on the same property shall be entitled to file an application if it is filed within the same four-year period following the date of the first insured mortgage certificate.

§ 200.505 Nature of defect.

Assistance in the correction of structural defects shall be available only in connection with a structural defect in the property which the Commissioner has determined to be of such a nature as to seriously affect the livability of the property. Such assistance shall not be available where the defect occurs as a result of fire, earthquake, flood, tornado, or waste.

§ 200.507 Eligibility requirements.

To be eligible for consideration by the Commissioner for receiving assistance in the correction of structural defects, the mortgagor must establish that:

(a) He is the owner of a one- to fourfamily dwelling covered by an individual mortgage that was insured by the Commissioner after September 2, 1964.

(b) The dwelling was approved for mortgage insurance prior to the beginning of construction and was inspected by the Commissioner or by the Veterans Administration.

(c) He has made reasonable efforts to obtain a correction of a structural defect in his property by the builder, seller, or other persons, and that the defect has not been corrected.

§ 200.510 Type of assistance.

The type of assistance in the correction of structural defects to be rendered a mortgagor who establishes eligibility shall be determined by the Commissioner. In those cases where the Commissioner determines it is appropriate and necessary, he may take any of the actions as follows:

(a) Pay expenses in connection with having the defect corrected.