Rules of Practice and procedure

Federal RegisterSep 24, 1998

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

12 CFR Part 1780

RIN 2550-AA04

Rules of Practice and procedure

AGENCY: Office of Federal Housing Enterprise Oversight, HUD.

ACTION: Notice of proposed rulemeking.

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SUMMARY: The Office of Federal Housing Enterprise Oversight is

proposing to adopt a regulation that establishes the rules of practice

and procedure to be followed when OFHEO conducts hearings on the

record. The proposed regulation implements the provisions of title XIII

of the Housing and Community Development Act of 1992, known as the

Federal Housing Enterprises Financial Safety and Soundness Act of 1992,

regarding hearings on the record in certain enforcement actions against

the Federal National Mortgage Association, the Federal Home Loan

Mortgage Corporation, or directors or executive officers of the

Enterprises. The proposed regulation would provide OFHEO personnel, the

Enterprises, the Enterprises' directors and executive officers and

other interested parties with the guidance necessary to prepare for and

participate in such hearings.

DATES: Written comments regarding the Notice of Proposed Rulemaking

must be received on or before December 23, 1998.

ADDRESSES: Send written comments to Anne E. Dewey, General Counsel,

Office of General Counsel, Office of Federal Housing Enterprise

Oversight, 1700 G Street, NW., Fourth Floor, Washington, DC 20552.

Alternatively, comments may be submitted via E-mail to

RegC[email protected].

FOR FURTHER INFORMATION CONTACT:

David A. Felt, Associate General Counsel, Office of Federal Housing

Enterprise Oversight, 1700 G Street, NW., Fourth Floor, Washington, DC

20552, telephone (202) 414-3750 (not a toll-free number). The telephone

number for the Telecommunications Device for the Deaf is: (800) 877-

8339.

SUPPLEMENTARY INFORMATION: The Supplementary Information is organized

according to this table of contents:

I. Background

II. Regulation Development

III. Synopsis of Proposed Regulation

IV. Regulatory Impact

I. Background

Title XIII of the Housing and Community Development Act of 1992,

Pub. L. No. 102-550, known as the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (1992 Act), established the Office of

Federal Housing Enterprise Oversight (OFHEO) as an independent office

within the Department of Housing and Urban Development (HUD) to ensure

that the Federal National Mortgage Association (Fannie Mae) and the

Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the

Enterprises) are adequately capitalized and operate in a safe and sound

manner. Included among the express statutory authorities of the

Director of OFHEO (Director) is the authority to issue regulations to

carry out the duties of the Director,\1\ to conduct hearings relating

to the issuance of cease-and-desist orders and the assessment of civil

money penalties.\2\ Prior to issuing a cease-and-desist order, OFHEO

must conduct hearings on the record and provide the subjects of the

order with notice and the opportunity to participate in such

hearings.\3\ Prior to imposing civil money penalties, OFHEO must

provide notice and the opportunity for a hearing to the persons subject

to the penalties. The 1992 Act grants responsibility for developing the

rules of practice and procedure governing issuance of these orders and

penalties, including the conduct of hearings, to OFHEO.\4\ Fannie Mae

and Freddie Mac are Government-sponsored enterprises with important

public purposes. These purposes include providing liquidity to the

residential mortgage market and increasing the availability of mortgage

credit benefiting low- and moderate-income families, rural areas,

central cities, and areas that are underserved by lending institutions.

The Enterprises engage in two principal businesses: investing in

residential mortgages and guaranteeing residential mortgage securities.

The securities they guarantee and the debt instruments they issue are

not backed by the full faith and credit of the United States.\5\

Despite the absence of such Federal backing, prices of Enterprise debt

securities reflect a market perception that the U.S. Government would

not permit the Enterprises to default. This perception principally

arises from the public purposes of the Enterprises, their Federal

charters, their potential access to a U.S. Treasury line of credit and

the statutory exemptions of their debt and mortgage-backed securities

from otherwise mandatory investor protection provisions.\6\ This

perception

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is bolstered by concern that the insolvency of either of the

Enterprises would have serious consequences for the nation's housing

markets and financial system.

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\1\ 1992 Act, section 1319G(a) (12 U.S.C. 4526(a)).

\2\ 1992 Act, sections 1371, 1376 (12 U.S.C. 4631, 4636).

\3\ 1992 Act, sections 1371, 1376(c) (12 U.S.C. 4631(c),

4636(c)).

\4\ 1992 Act, section 1313 (12 U.S.C. 4513).

\5\ Sections 301(4), 306(h)(2), Federal Home Loan Mortgage

Corporation Act (12 U.S.C. note (b)(3, 4) to 1451, 1455(h)(2));

sections 301(4), 304(b), Federal National Mortgage Association

Charter Act (12 U.S.C. 1716(3, 4), 1719(b); and section 1302(4),

1992 Act (12 U.S.C. 4501(4)).

\6\ See, e.g., 12 U.S.C. 24 (authorizing unlimited investment by

national banks in obligations of, or issued by, the Enterprises); 12

U.S.C. 1455(g), 1719(d), 1723c (exempting Enterprise securities from

oversight from Federal regulators); 15 U.S.C. 77r-1(a) (preempting

State law that would treat Enterprise securities differently from

obligations of the United States for investment purposes); and 15

U.S.C. 77r-1(c) (exempting Enterprise securities from State

securities laws).

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II. Regulation Development

In designing the structure and substance of the proposed rules,

OFHEO reviewed the rules of practice and procedure of other financial

safety and soundness regulatory agencies; specifically, the Office of

the Comptroller of the Currency, the Board of Governors of the Federal

Reserve System, the Federal Deposit Insurance Corporation, the Office

of Thrift Supervision, the National Credit Union Administration and the

Farm Credit Administration. OFHEO also reviewed the rules of practice

and procedure established by the Secretary of HUD. OFHEO reviewed the

rules of practice and procedure of these other agencies because, like

OFHEO, each such agency is authorized to issue cease-and-desist orders

and to impose civil money penalties. The proposed regulation is based

upon OFHEO's analysis of comparable rules and the requirements of the

1992 Act.

The practice and procedure rules of the various agencies reviewed

by OFHEO differed from each other in many respects, which reflected the

differences in the missions of those agencies. Likewise, the proposed

regulation is not precisely patterned upon one agency's approach, but

incorporates elements from each that are best suited to OFHEO's mission

and organizational structure.

III. Synopsis of Proposed Regulation

The 1992 Act requires OFHEO to conduct its hearings pertaining to

cease-and-desist orders and civil money penalties in accordance with

the Administrative Procedure Act (APA) \7\ (which is codified in

chapter 5 of title 5 of the Untied States Code).\8\ Thus, the proposed

rules of practice and procedure supplement the APA provisions governing

agency adjudications and include provisions unique to OFHEO's mission.

These proposed rules apply not only to enforcement hearings, but also

to any other adjudication required by statute to be determined on the

record after opportunity for hearing.

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\7\ 1992 Act, section 1373(a)(3)(42 U.S.C. 4633(a)(3)).

\8\ 5 U.S.C. 500-559.

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The proposed regulation includes provisions relating to prehearing

procedures and activities, the conduct of the hearing itself, and the

qualifications and disciplinary rules for practice before OFHEO. The

proposed regulation establishes that hearings are open to the public

unless the Director determines that a public hearing would be contrary

to the public interest. The proposed regulation also defines important

terms used in the regulation and describes the authority of the

Director and the presiding officer.

Under the proposed regulation, the Director commences the hearing

process by issuing and serving a notice of charges on a respondent. A

presiding officer, appointed by the Director, presides over the course

of the hearing from the time of the appointment until the presiding

officer files a recommended decision and order, along with the hearing

record, with the Director for a final decision. During the course of

the hearing, the presiding officer controls virtually all aspects of

the proceeding. The presiding officer determines the hearing schedule,

presides over any prehearing conferences, rules on motions, discovery,

and evidentiary issues and ensures that the proceeding is fair,

equitable, and impartial. The presiding officer does not, however, have

the authority to make a ruling that disposes of the proceeding. Only

the Director has the authority to dismiss the proceeding or make a

final determination of the merits of the proceeding.

Under this proposed regulation, the parties to the proceeding have

the right to present evidence and witnesses at the hearing and have the

right to examine and cross-examine the witnesses. At the completion of

the hearing, the parties may submit proposed findings of fact and

conclusions of law and a proposed order. The presiding officer then

submits the complete record to the Director for consideration and

action. The record includes the presiding officer's recommended

decision, recommended findings of fact and conclusions of law, and

proposed order. The record also includes all prehearing and hearing

transcripts, exhibits, rulings, motions, briefs and memoranda and all

supporting papers filed in connection with the hearing. The Director

shall issue a final ruling within 90 days of the date the Director

serves notice on the parties that the record is complete and the case

has been submitted for final decision.

Subpart D of this proposed regulation contains rules governing

practice by parties or their representatives before OFHEO. This

proposed subpart addresses the imposition of sanctions by the presiding

officer or the Director against parties or their representatives in an

adjudicatory proceeding under this part. This subpart also covers other

disciplinary sanctions--censure, suspension or disbarment--against

individuals who appear before OFNEO in a representational capacity

either in an adjudicatory proceeding under part 1780 or in any other

matters connected with presentations to OFHEO relating to a client's or

other principal's rights, privileges, or liabilities. This

representation includes, but is not limited to, the practice of

attorneys and accountants. Employees of OFHEO are not subject to

disciplinary proceedings under this subpart.

IV. Regulatory Impact

Executive Order 12612, Federalism

Executive Order 12612 requires that Executive departments and

agencies identify regulatory actions that have significant federalism

implications. ``Federalism implications'' is defined to specify

regulations or actions that have substantial, direct effects on the

States, on the relationship or distribution of power between the

national government and the States, or on the distribution of power and

responsibilities between Federal and State government. OFHEO has

determined that this proposed regulation has no federalism implications

that warrant the preparation of a Federalism Assessment in accordance

with Executive Order 12612.

Executive Order 12866, Regulatory Planning and Review

OFHEO has determined that this proposed regulation is not a

significant regulatory action as such term is defined in Executive

Order 12866, has so indicated to the Office of Management and Budget

(OMB) and was not notified by OMB that the proposed regulation must be

reviewed by OMB.

Executive Order 12988, Civil Justice Reform

Executive Order 12988 sets forth guidelines to promote the just and

efficient resolution of civil claims and to reduce the risk of

litigation to the government. The proposed regulation meets the

applicable standards of sections 3(a) and 3(b) of Executive Order

12988.

Unfunded Mandates Reform Act of 1995

This proposed regulation does not include a Federal mandate that

may result in the expenditure by State, local and tribal governments,

in the aggregate, or by the private sector, of $100,000,000 or more

(adjusted annually for inflation) in any one year. Consequently, the

proposed regulation does not warrant

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the preparation of an assessment statement in accordance with the

Unfunded Mandates Reform Act of 1995.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that

a proposed regulation that has a significant economic impact on a

substantial number of small entities must include an initial regulatory

flexibility analysis describing the rule's impact on small entities.

Such an analysis need not be undertaken if the agency head certifies

that the rule will not have a significant economic impact on a

substantial number of small entities. 5 U.S.C. 605(b).

OFHEO has considered the impacts of the proposed regulation under

the Regulatory Flexibility Act. The proposed regulation does not have a

significant economic impact on a substantial number of small entities,

since it is applicable only to the Enterprises, which are not small

entities. Therefore, OFHEO's General Counsel acting under delegated

authority has certified that the proposed regulation would not have a

significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) requires

that regulations involving the collection of information receive

clearance from OMB. The proposed regulation contains no such collection

of information requiring OMB approval under the Paperwork Reduction

Act. Consequently, no information has been submitted to OMB for review.

List of Subjects in 12 CFR Part 1780

Administrative practice and procedure, Penalties.

Accordingly, for the reasons set forth in the preamble, OFHEO

proposes to amend 12 CFR part 1780 as follows:

PART 1780--RULES OF PRACTICE AND PROCEDURE

1. Revise the heading for part 1780 to read as set forth above.

2. Revise the authority citation for part 1780 to read as follows:

Authority: 12 U.S.C. 4513, 4631-4641.

Subpart E also issued under 28 U.S.C. 2461 note.

Subpart E--[Amended]

3. Redesignate Secs. 1780.70 and 1780.71 as Secs. 1780.80 and

1780.81, respectively.

4. Add subparts A through D to part 1780 to read as follows:

Subpart A--General Rules

Sec.

1780.1 Scope.

1780.2 Rules of construction.

1780.3 Definitions.

1780.4 Authority of the Director.

1780.5 Authority of the presiding officer.

1780.6 Public hearings.

1780.7 Good faith certification.

1780.8 Ex parte communications.

1780.9 Filing of papers.

1780.10 Service of papers.

1780.11 Computing time.

1780.12 Change of time limits.

1780.13 Witness fees and expenses.

1780.14 Opportunity for informal settlement.

1780.15 OFHEO's right to conduct examination.

1780.16 Collateral attacks on adjudicatory proceeding.

Subpart B--Prehearing Proceedings

1780.20 Commencement of proceeding and contents of notice of

charges.

1780.21 Answer.

1780.22 Amended pleadings.

1780.23 Failure to appear.

1780.24 Consolidation and severance of actions.

1780.25 Motions.

1780.26 Discovery.

1780.27 Request for document discovery from parties.

1780.28 Document subpoenas to nonparties.

1780.29 Deposition of witness unavailable for hearing.

1780.30 Interlocutory review.

1780.31 Summary disposition.

1780.32 Partial summary disposition.

1780.33 Scheduling of prehearing conferences.

1780.34 Prehearing submissions.

1780.35 Hearing subpoenas.

Subpart C--Hearing and Posthearing Proceedings

1780.50 Conduct of hearings

1780.51 Evidence.

1780.52 Post hearing filings.

1780.53 Recommended decision and filing of record.

1780.54 Exceptions to recommended decision.

1780.55 Review by Director.

1780.56 Exhaustion of administrative remedies.

1780.57 Stays pending judicial review.

Subpart D--Rules of Practice Before the Office of Federal Housing

Enterprise Oversight

1780.70 Scope.

1780.71 Definitions.

1780.72 Appearance and practice in adjudicatory proceedings.

1780.73 Conflicts of interest.

1780.74 Sanctions.

1780.75 Censure, suspension, disbarment and reinstatement.

Subpart A--General Rules

Sec. 1780.1 Scope.

This subpart prescribes rules of practice and procedure applicable

to the following adjudicatory proceedings:

(a) Cease-and-desist proceedings under sections 1371 and 1373,

title XIII of the Housing and Community Development Act of 1992, Pub.

L. No. 102-550, known as the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (1992 Act) (12 U.S.C. 4631 and 4633).

(b) Civil money penalty assessment proceedings against the Federal

National Mortgage Association, the Federal Home Loan Mortgage

Corporation (collectively, the Enterprises), or any executive officer

or director of any Enterprise under sections 1373 and 1376 of the 1992

Act (12 U.S.C. 4633 and 4636).

the record after opportunity for hearing, except to the extent

otherwise provided in the regulations specifically governing such an

adjudication.

Sec. 1780.2 Rules of construction.

For purposes of this part--

(a) Any term in the singular includes the plural and the plural

includes the singular, if such use would be appropriate;

(b) Any use of a masculine, feminine, or neuter gender encompasses

all three, if such use would be appropriate; and

of record, if any, may, on behalf of that party, take any action

required to be taken by the party.

Sec. 1780.3 Definitions.

For purposes of this part, unless explicitly stated to the

contrary--

(a) Adjudicatory proceeding means a proceeding conducted pursuant

to these rules and leading to the formulation of a final order than a

regulation;

(b) Decisional employee means any member of the Director's or the

presiding officer's staff who has not engaged in an investigation or

prosecutorial role in a proceeding and who may assist the Director or

the presiding officer, respectively, in preparing orders, recommended

decisions, decisions and other documents under this subpart.

(d) Enterprise means the Federal National Mortgage Association and

any affiliate thereof and the Federal Home Loan Mortgage Corporation

and any affiliate thereof.

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(e) OFHEO means the Office of Federal Housing Enterprise Oversight

of the Department of Housing and Urban Development.

(f) Party means OFHEO and any person named as a party in any

notice.

(g) Person means an individual, sole proprietor, partnership,

corporation, unincorporated association, trust, joint venture, pool,

syndicate, agency, or other entity or organization.

(h) Presiding officer means an administrative law judge or any

other person designated by the Director to conduct a hearing.

(i) Representative of record means an individual who is authorized

to represent a person or is representing himself and who has filed a

notice of appearance in accordance with Sec. 1780.72.

(j) Respondent means any party other than OFHEO.

(k) Violation includes any action (alone or with another or others)

for or toward causing, bringing about, participating in, counseling, or

aiding or abetting a violation.

(l) The 1992 Act is Title XIII of the Housing and Community

Development Act of 1992, Pub. L. No. 102-550, known as the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992 (1992

Act).

Sec. 1780.4 Authority of the Director.

The Director may, at any time during the pendency of a proceeding,

perform, direct the performance of, or waive performance of any act

that could be done or ordered by the presiding officer.

Sec. 1780.5 Authority of the presiding officer.

(a) General rule. All proceedings governed by this subpart shall be

conducted in accordance with the provisions of 5 U.S.C. chapter 5. The

presiding officer shall have complete charge of the hearing, conduct a

fair and impartial hearing, avoid unnecessary delay and assure that a

record of the proceeding is made.

(b) Powers. The presiding officer shall have all powers necessary

to conduct the proceeding in accordance with paragraph (a) of this

section and 5 U.S.C. 556(c). The presiding officer is authorized to--

(1) Set and change the date, time and place of the hearing upon

reasonable notice to the parties;

(2) Continue or recess the hearing in whole or in part for a

reasonable period of time;

(3) Hold conferences to identify or simplify the issues, or to

consider other matters that may aid in the expeditious disposition of

the proceeding;

(4) Administer oaths and affirmations;

(5) Issue Subpoenas and subpoenas duces tecum and revoke, quash, or

modify such subpoenas;

(6) Take and preserve testimony under oath;

(7) Rule on motions and other procedural matters appropriate in an

adjudicatory proceeding, except that only the Director shall have the

power to grant any motion to dismiss the proceeding or make a final

determination of the merits of the proceeding;

(8) Regulate the scope and timing of discovery;

(9) Regulate the course of the hearing and the conduct of

representatives and parties;

(10) Examine witnesses;

(11) Receive, exclude, limit, or otherwise rule on evidence;

(12) Upon motion of a party, take official notice of facts;

(13) Recuse himself upon motion made by a party or on his own

motion;

(14) Prepare and present to the Director a recommended decision as

provided in this part; and

(15) Do all other things necessary and appropriate to discharge the

duties of a presiding officer.

Sec. 1780.6 Public hearings.

(a) General rule. All hearings shall be open to the public, unless

the Director, in his discretion, determines that holding an open

hearing would be contrary to the public interest. The Director may make

such determination sua sponte at any time by written notice to all

parties.

(b) Motion for closed hearing. Within 20 days of service of the

notice of charges, any party may file with the presiding officer a

motion for a private hearing and any party may file a pleading in reply

to the motion. The presiding officer shall forward the motion and any

reply, together with a recommended decision on the motion, to the

Director, who shall make a final determination. Such motions and

replies are governed by Sec. 1780.25.

discretion may file any document or part of a document under seal if

such counsel makes a written determination that disclosure of the

document would be contrary to the public interest. The presiding

officer shall take all appropriate steps to preserve the

confidentiality of such documents or parts thereof, including closing

portions of the hearing to the public.

Sec. 1780.7 Good faith certification.

(a) General requirement. Every filing or submission of record

following the issuance of a notice by the Director shall be signed by

at least one representative of record in his individual name and shall

state that representative's address and telephone number and the names,

addresses the telephone numbers of all other representatives of record

for the person making the filing or submission.

(b) Effect of signature. (1) By signing a document, the

representative of record or party certifies that--

(i) The representative of record or party has read the filing of

submission of record;

(ii) To the best of his knowledge, information and belief formed

after reasonable inquiry, the filing or submission of record is well-

grounded in fact and is warranted by existing law or a good faith,

nonfrivolous argument for the extension, modification, or reversal of

existing law; and

(iii) The filing or submission of record is not made for any

improper purpose, such as to harass or to cause unnecessary delay or

needless increase in the cost of litigation.

(2) If a filing or submission of record is not signed, the

presiding officer shall strike the filing or submission of record,

unless it is signed promptly after the omission is called to the

attention of the pleader or movant.

oral motion or oral argument by any representative or party shall

constitute a certification that to the best of his knowledge,

information, and belief, formed after reasonable inquiry, his

statements are well-grounded in fact and are warranted by existing law

or a good faith, nonfriviolous argument for the extension,

modification, or reversal of existing law and are not made for any

improper purpose, such as to harass or to cause unnecessary delay or

needless increase in the cost of litigation.

Sec. 1780.8 Ex parte communications.

(a) Definition. (1) Ex parte communication means any material oral

or written communication relevant to the merits of an adjudicatory

proceeding that was neither on the record nor on reasonable prior

notice to all parties that take place between--

(i) An interested person outside OFHEO (including the person's

representative); and

(ii) The presiding officer handling that proceeding, the Director,

a decisional employee assigned to that proceeding, or any other person

who is or may reasonably be expected to be involved in the decisional

process.

(2) A communication that does not concern the merits of an

adjudicatory proceeding, such as request for status of

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the proceeding, does not constitute an ex parte communication.

(b) Prohibition of ex parte communications. From the time the

notice commencing the proceeding is issued by the Director until the

date that the Director issues his final decision pursuant to

Sec. 1780.55, no person referred to in paragraph (a)(1)(i) of this

section shall knowingly make or cause to be made an ex parte

communication. The Director, presiding officer, or a decisional

employee shall not knowingly make or cause to be made an ex parte

communication.

parte communication is received by any person identified in paragraph

(a) of this section, that person shall cause all such written

communications (or, if the communication is oral, a memorandum stating

the substance of the communication) to be placed on the record of the

proceeding and served on all parties. All parties to the proceeding

shall have an opportunity, within 10 days of receipt of service of the

ex parte communication, to file response thereto and to recommend any

sanctions, in accordance with paragraph (d) of this section, that they

believe to be appropriate under the circumstances.

(d) Sanctions. Any party or representative for party who makes an

ex parte communications, or who encourages or solicits another to make

any such communications, may be subject to any appropriate sanction or

sanctions imposed by the Director or the presiding officer, including,

but not limited to, exclusion from the proceedings and an adverse

ruling on the issue that is the subject of the prohibited

communication.

(e) Consultations by presiding officer. Except to the extent

required for the disposition of ex parte matters as authorized by law,

the presiding officer may not consult a person or party on any matter

relevant to the merits of the adjudication, unless on notice and

opportunity for all parties to participate.

(f) Separation of functions. An employee or agent engaged in the

performance of investigative or prosecuting functions for OFHEO in a

case may not, in that or a factually related case, participate or

advise in the decision, recommended decision, or Director review under

Sec. 1780.55 of the recommended decision, except as witness or counsel

in public proceedings.

Sec. 1780.9 Filing of papers.

(a) Filing. Any papers required to be filed shall be addressed to

the presiding officer and filed with OFHEO, 1700 G Street, NW., Fourth

Floor, Washington, DC 20552.

(b) Manner of filing. Unless otherwise specified by the Director or

the presiding officer, filing shall be accomplished by:

(1) Personal service;

(2) Delivery to the U.S. Postal Service or to a reliable commercial

delivery service for same day or overnight delivery;

(3) Mailing by first class, registered, or certified mail; or

(4) Transmission by electronic media, only if expressly authorized,

and upon any conditions specified, by the Director or the presiding

officer. All papers filed by electronic media shall also concurrently

be filed in accordance with paragraph (c) of this section.

must set forth the name, address and telephone number of the

representative or party making the filing and must be accompanied by a

certification setting forth when and how service has been made on all

other parties. all papers filed must be doubled-spaced and printed or

typewritten on 8\1/2\ x 11-inch paper and must be clear and legible.

(2) Signature. All papers must be dated and signed as provided in

Sec. 1780.7.

(3) Caption. All papers filed must include at the head thereof, or

on a title page, the name OFHEO and of the filing party, the title and

docket number of the proceeding and the subject of the particular

paper.

(4) Number of copies. Unless otherwise specified by the Director or

the presiding officer, an original and one copy of all documents and

papers shall be filed, except that only one copy of transcripts of

testimony and exhibits shall be filed.

Sec. 1780.10 Service of papers.

(a) By the parties. Except as otherwise provided, a party filing

papers or serving a subpoena shall serve a copy upon the representative

of record for each party to the proceeding so represented and upon any

party not so represented.

(b) Method of service. Except as provided in paragraphs (c)(2) and

(d) of this section, a serving party shall use one or more of the

following methods of service:

(1) Personal service;

(2) Delivery to the U.S. Postal Service or to a reliable commercial

delivery service for same day or overnight delivery;

(3) Mailing by first class, registered, or certified mail; or

(4) Transmission by electronic media, only if the parties mutually

agree. Any papers served by electronic media shall also concurrently be

served in accordance with the requirements of Sec. 1780.9(c).

required to be served by the Director or the presiding officer upon a

party who has appeared in the proceeding in accordance with

Sec. 1780.72 shall be served by any means specified in paragraph (b) of

this section.

(2) If a party has not appeared in the proceeding in accordance

with Sec. 1780.72, the Director or the presiding officer shall make

service by any of the following methods:

(i) By personal service;

(ii) If the person to be served is an individual, by delivery to a

person of suitable age and discretion at the physical location where

the individual resides or works;

(iii) If the person to be served is a corporation or other

association, by delivery to an officer, managing or general agent, or

to any other agent authorized by appointment or by law to receive

service and, if the agent is one authorized by statute to receive

service and the statute so requires, by also mailing a copy to the

party;

(iv) By registered or certified mail addressed to the person's last

known address; or

(v) By any other method reasonably calculated to give actual

notice.

(d) Subpoenas. Service of a subpoenas may be made:

(1) By person service;

(2) If the person to be served is an individual, by delivery to a

person of suitable age and discretion at the physical location where

the individual resides or works;

(3) If the person to be served is a corporation or other

association, by delivery to an officer, managing or general agent, or

to any other agent authorized by appointment or by law to receive

service and, if the agent is one authorized by statute to receive

service and the statute so requires, by also mailing a copy to the

party; or

(4) By registered or certified mail addressed to the person's last

known address; or

(5) By any other method reasonably calculated to give actual

notice.

(e) Area of service. Service in any State, commonwealth,

possession, territory of the United States or the District of Columbia

on any person doing business in any State, commonwealth, possession,

territory of the United States or the District of Columbia, or on any

person as otherwise permitted by law, is effective

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without regard to the place where the hearing is held.

(f) Proof of service. Proof of service of papers filed by a party

shall be filed before action is taken thereon. The proof shall show the

date and manner of service and may be written acknowledgment of service

by declaration of the person making service or by certificate of a

representative of record. Failure to make proof of service shall not

affect the validity of service. The presiding officer may allow the

proof to be amended or supplied, unless to do so would result in

material prejudice to a party.

Sec. 1780.11 Computing time.

(a) General rule. In computing any period of time prescribed or

allowed by this subpart, the date of the act or event that commences

the designated period of time is not included. The last day so computed

is included unless it is a Saturday, Sunday, or Federal holiday. When

the last day is a Saturday, Sunday or Federal holiday, the period shall

run until the end of the next day that is not a Saturday, Sunday, or

Federal holiday. Intermediate Saturdays, Sundays and Federal holidays

are included in the computation of time. However, when the time period

within which an act is to be performed is 10 days or less, not

including any additional time allowed for in paragraph (c) of this

section, intermediate Saturdays, Sundays and Federal holidays are not

included.

(b) When papers are deemed to be filed or served. (1) Filing and

service are deemed to be effective--

(i) In the case of personal service or same day reliable commercial

delivery service, upon actual service;

(ii) In the case of U.S. Postal Service or reliable commercial

overnight delivery service, or first class, registered, or certified

mail, upon deposit in or delivery to an appropriate point of

collection; or

(ii) In the case of transmission by electronic media, as specified

by the authority receiving the filing, in the case of filing, and as

agreed among the parties, in the case of service.

(2) The effective filing and service dates specified in paragraph

(b)(1) of this section may be modified by the Director or the presiding

officer in the case of filing or by agreement of the parties in the

case of service.

papers. Whenever a time limit is measured by a prescribed period from

the service of any notice or paper, the applicable time limits shall be

calculated as follows:

(1) If service was made by first class, registered, or certified

mail, or by delivery to the U.S. Postal Service for longer than

overnight delivery service, add 3 calendar days to the prescribed

period for the responsive filing.

(2) If service was made by U.S. Postal Service or reliable

commercial overnight delivery service, add 1 calendar day to the

prescribed period for the responsive filing.

(3) If service was made by electronic media transmission, add 1

calendar day to the prescribed period for the responsive filing, unless

otherwise determined by the Director or the presiding officer, in the

case of filing, or by agreement among the parties, in the case of

service.

Sec. 1780.12 Change of time limits.

Except as otherwise provided by law, the presiding officer may, for

good cause shown, extend the time limits prescribed above or prescribed

by any notice or order issued in the proceedings. After the referral of

the case to the Director pursuant to Sec. 1780.53, the Director may

grant extensions of the time limits for good cause shown. Extensions

may be granted on the motion of a party after notice and opportunity to

respond is afforded all nonmoving parties or on the Director's or the

presiding officer's own motion.

Sec. 1780.13 Witness fees and expenses.

Witness (other than parties) subpoenaed for testimony or deposition

shall be paid the same fees for attendance and mileage as are paid in

the United States district courts in proceedings in which the United

States is a party, provided that, in the case of a discovery subpoena

addressed to a party, no witness fees or mileage shall be paid. Fees

for witnesses shall be tendered in advance by the party requesting the

subpoena, except that fees and mileage need not be tendered in advance

where OFHEO is the party requesting the subpoena. OFHEO shall not be

required to pay any fees to or expenses of any witness not subpoenaed

by OFHEO.

Sec. 1780.14 Opportunity for informal settlement.

Any respondent may, at any time in the proceeding, unilaterally

submit to OFHEO's counsel of record written offers or proposals for

settlement of a proceeding without prejudice to the rights of any of

the parties. No such offer proposal shall be made to any OFHEO

representative other than OFHEO's counsel of record. Submission of a

written settlement offer does not provide a basis for adjourning or

otherwise delaying all or any portion of a proceeding under this part.

No settlement offer or proposal, or any subsequent negotiation or

resolution, is admissible as evidence in any proceeding.

Sec. 1780.15 OFHEO's right to conduct examination.

Nothing contained in this part limits in any manner the right of

OFHEO to conduct any examination, inspection, or visitation of any

Enterprise or affiliate, or the right of OFHEO to conduct or continue

any form of investigation authorized by law.

Sec. 1780.16 Collateral attacks on adjudicatory proceeding.

If an interlocutory appeal or collateral attack is brought in any

court concerning all or any part of an adjudicatory proceeding, the

challenged adjudicatory proceeding shall continue without regard to the

pendency of that court proceeding. No default or other failure to act

as directed in the adjudicatory proceeding within the times prescribed

in this subpart shall be excused based on the pendency before any court

of any interlocutory appeal or collateral attack.

Subpart B--Prehearing Proceedings

Sec. 1780.20 Commencement of proceeding and contents of notice of

charges.

Proceedings under this subpart are commenced by the issuance of a

notice of charges by the Director, which must be served upon the

respondent. Such notice shall state all of the following:

(a) The legal authority for the proceeding and for OFHEO's

jurisdiction over the proceeding;

(b) A statement of the matters of fact or law showing that OFHEO is

entitled to relief;

relief;

(d) The time, place and nature of the hearing;

(e) The time within which to file an answer;

(f) The time within which to request a hearing; and

(g) The address for filing the answer and/or request for a hearing.

Sec. 1780.21 Answer.

(a) When. Unless otherwise specified by the Director in the notice,

respondent shall file an answer within 20 days of service of the

notice.

(b) Content of answer. An answer must respond specifically to each

paragraph or allegation of fact contained in the notice and must admit,

deny, or state that the party lacks sufficient information to admit or

deny each allegation of fact. A statement of lack of

[[Page 51037]]

information has the effect of a denial. Denials must fairly meet the

substance of each allegation of fact denied; general denials are not

permitted. When a respondent denies part of an allegation, that part

must be denied and the remainder specifically admitted. Any allegation

of fact in the notice that is not denied in the answer is deemed

admitted for purposes of the proceeding. A respondent is not required

to respond to the portion of a notice that constitutes the prayer for

relief or proposed order. The answer must set forth affirmative

defenses, if any, asserted by the respondent.

this section within the time provided constitutes a waiver of such

respondent's right to appear and contest the allegations in the notice.

If no timely answer is filed, OFHEO's counsel of record may file a

motion for entry of an order of default. Upon a finding that no good

cause has been shown for the failure to file a timely answer, the

presiding officer shall file with the Director a recommended decision

containing the finding and the relief sought in the notice. Any final

order issued by the Director based upon a respondent's failure to

answer is deemed to be an order issued upon consent.

Sec. 1780.22 Amended pleadings.

(a) Amendments. The notice or answer may be amended or supplemented

at any stage of the proceeding. The respondent must answer an amended

notice within the time remaining for the respondent's answer to the

original notice, or within 10 days after service of the amended notice,

whichever period is longer, unless the Director or presiding officer

orders otherwise for good cause shown.

(b) Amendments to conform to the evidence. When issues not raised

in the notice or answer are tried at the hearing by express or implied

consent of the parties, they will be treated in all respects as if they

had been raised in the notice or answer, and no formal amendments are

required. If evidence is objected to at the hearing on the ground that

it is not within the issues raised by the notice or answer, the

presiding officer may admit the evidence when admission is likely to

assist in adjudicating the merits of the action. The presiding officer

will do so freely when the determination of the merits of the action is

served thereby and the objecting party fails to satisfy the presiding

officer that the admission of such evidence would unfairly prejudice

that party's action or defense upon the merits. The presiding officer

may grant a continuance to enable the objecting party to meet such

evidence.

Sec. 1780.23 Failure to appear.

Failure of a respondent to appear in person at the hearing or by a

duly authorized representative constitutes a waiver of respondent's

right to a hearing and is deemed an admission of the facts as alleged

and consent to the relief sought in the notice. Without further

proceedings or notice to the respondent, the presiding officer shall

file with the Director a recommended decision containing the findings

and the relief sought in the notice.

Sec. 1780.24 Consolidation and severance of actions.

(a) Consolidation. On the motion of any party, or on the presiding

officer's own motion, the presiding officer may consolidate, for some

or all purposes, any two or more proceedings, if each such proceeding

involves or arises out of the same transaction, occurrence or series of

transactions or occurrences, or involves at least one common respondent

or a material common question of law or fact, unless such consolidation

would cause unreasonable delay or injustice. In the event of

consolidation under this section, appropriate adjustment to the

prehearing schedule must be made to avoid unnecessary expense,

inconvenience, or delay.

(b) Severance. The presiding officer may, upon the motion of any

party, sever the proceeding for separate resolution of the matter as to

any respondent only if the presiding officer finds that undue prejudice

or injustice to the moving party would result from not severing the

proceeding and such undue prejudice or injustice would outweigh the

interests of judicial economy and expedition in the complete and final

resolution of the proceeding.

1780.25 Motions.

(a) In writing. (1) Except as otherwise provided herein, an

application or request for an order or ruling must be made by written

motion.

(2) All written motions must state with particularity the relief

sought and must be accompanied by a proposed order.

(3) No oral argument may be held on written motions except as

otherwise directed by the presiding officer. Written memoranda, briefs,

affidavits, or other relevant material or documents may be filed in

support of or in opposition to a motion.

(b) Oral motions. A motion may be made orally on the record unless

the presiding officer directs that such motion be reduced to writing.

officer, except that following the filing of a recommended decision,

motions must be filed with the Director.

(d) Responses. (1) Except as otherwise provided herein; any party

may file a written response to a motion within 10 days after service of

any written motion, or within such other period of time as may be

established by the presiding officer or the Director. The presiding

officer shall not rule on any order oral or written motion before each

party has had an opportunity to file a response.

(2) The failure of a party to oppose a written motion or an oral

motion made on the record is deemed a consent by that party to the

entry of an order substantially in the form of the order accompanying

the motion.

(e) Dilatory motions. Frivolous, dilatory, or repetitive motions

are prohibited. The filing of such motions may form the basis for

sanctions.

(f) Dispositive motions. Dispositive motions are governed by

Secs. 1780.31 and 1780.32.

Sec. 1780.26 Discovery.

(a) Limits on discovery. Subject to the limitations set out in

paragraphs(b), (d), and (e) of this section, a party to a proceeding

under this subpart may obtain document discovery by serving a written

request to produce documents. For purposes of a request to produce

documents, the term ``documents'' may be defined to include drawings,

graphs, charts, photographs, recordings, data stored in electronic

form, and other data compilations from which information can be

obtained or translated, if necessary, by the parties through detection

devices into reasonably unable form, as well as written material of all

kinds.

(b) Relevance. A party may obtain document discovery regarding any

matter not privileged that has material relevance to the merits of the

pending action. Any request to produce documents that calls for

irrelevant material, that is unreasonable, oppressive, excessive in

scope, unduly, burdensome, or repetitive of previous requests, or that

seeks to obtain privileged documents will be denied or modified. A

request is unreasonable, oppressive, excessive in scope, or unduly

burdensome if, among other things, it fails to include justifiable

limitations on the time period covered and the geographic locations to

be searched, the time provided to respond in the request is inadequate,

or the request calls for copies of documents to

[[Page 51038]]

be delivered to the requesting party and fails to include the

requestor's written agreement to pay in advance for the copying, in

accordance with Sec. 1780.27.

production of documents for inspection and copying. No other form of

discovery shall be allowed. Discovery by use of interrogatories is not

permitted. This paragraph shall not be interpreted to require the

creation of a document.

(d) Privileged matter. Privileged documents are not discoverable.

Privileges include the attorney-client privilege, work-product

privilege, any government's or government agency's deliberative process

privilege and any other privileges provided by the Constitution, any

applicable act of Congress, or the principles of common law.

(e) Time limits. All discovery, including all responses to

discovery requests, shall be completed at least 20 days prior to the

date scheduled for the commencement of the hearing. No exception to

this time limit shall be permitted, unless the presiding officer finds

on the record that good cause exists for waiving the requirements of

this paragraph.

Sec. 1780.27 Request for document discovery from parties.

(a) General rule. Any party may serve on any other party a request

to produce for inspection any discoverable documents that are in the

possession, custody, or control of the party upon whom the request is

served. Copies of the request shall be served on all other parties. The

request must identify the documents to be produced either by individual

item or by category and must describe each item and category with

reasonable particularity. Documents must be produced as they are kept

in the usual course of business of they shall be labeled and organized

to correspond with the categories in the request.

(b) Production or copying. The request must specify a reasonable

time, place and manner for production and performing any related acts.

In lieu of inspecting the documents, the requesting party may specify

that all or some of the responsive documents be copied and the copies

delivered to the requesting party. If copying of fewer than 250 pages

is requested, the party to whom the request is addressed shall bear the

cost of copying and shipping charges. If a party requests more than 250

pages of copying, the requesting party shall pay for copying and

shipping charges. Copying charges are at the current rate per page

imposed by OFHEO at Sec. 1710.22(b)(2) of this chapter for requests for

documents filed under the Freedom of Information Act, 12 U.S.C. 552.\1\

The party to whom the request is addressed may require payment in

advance before producing the documents.

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\1\ At the time of publication OFHEO has not issued a final

regulation governing release of information. Until the release of

information regulation is final, charges shall be imposed at the

rate specified in the proposed regulation, 60 FR 25170 (May 11,

1995).

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discovery request is not required to supplement the response, unless:

(1) The responding party learns that in some material respect the

information disclosed is incomplete or incorrect, and

(2) The additional or corrective information has not otherwise been

made known to the other parties during the discovery process or in

writing.

(d) Motions to strike or limit discovery requests. (1) Any party

that objects to a discovery request may, within 10 days of being served

with such request, file a motion in accordance with the provisions of

Sec. 1780.25 to strike or otherwise limit the request. If an objection

is made to only a portion of an item or category in a request, the

objection shall specify that portion. Any objections not made in

accordance with this paragraph and Sec. 1780.25 are waived.

(2) The party who served the request that is the subject of a

motion to strike or limit may file a written response within 5 days of

service of the motion. No other party may file a response.

(e) Privilege. At the time other documents are produced, all

documents withheld on the grounds of privilege must be reasonably

identified, together with a statement of the basis for the assertion of

privilege. When similar documents that are protected by deliberate

process, attorney work-product, or attorney-client privilege are

voluminous, these documents may be identified by category instead of by

individual document. The presiding officer retains discretion to

determine when the identification by category is insufficient.

(f) Motions to compel production. (1) If a party withholds any

documents as privileged or fails to comply fully with a discovery

request, the requesting party may, within 10 days of the assertion of

privilege or of the time the failure to comply becomes known to the

requesting party, file a motion in accordance with the provisions of

Sec. 1780.25 for the issuance of a subpoena compelling production.

(2) The party who asserted the privilege or failed to comply with

the request may, within 5 days of service of a motion for the issuance

of a subpoena compelling production, file a written response to the

motion. No other party may file a response.

(g) Ruling on motions. After the time for filing responses to

motions pursuant to this section has expired, the presiding officer

shall rule promptly on all such motions. If the presiding officer

determines that a discovery request, or any of its terms, calls for

irrelevant material, is unreasonable, oppressive, excessive in scope,

unduly burdensome, or repetitive of previous requests, or seeks to

obtain privileged documents, he may deny or modify the request, and may

issue appropriate protective orders, upon such conditions as justice

may require. The pendency of a motion to strike or limit discovery or

to compel production shall not be a basis for staying or continuing the

proceeding, unless otherwise ordered by the presiding officer.

Notwithstanding any other provision in this part, the presiding officer

may not release, or order a party to produce, documents withheld on

grounds of privilege if the party has stated to the presiding officer

its intention to file a timely motion for interlocutory review of the

presiding officer's order to produce the documents, until the motion

for interlocutory review has been decided.

(h) Enforcing discovery subpoenas. If the presiding officer issues

a subpoena compelling production of documents by a party, the

subpoenaing party may, in the event of noncompliance and to the extent

authorized by applicable law, apply to any appropriate United States

district court for an order requiring compliance with the subpoena. A

party's right to seek court enforcement of a subpoena shall not in any

manner limit the sanctions that may be imposed by the presiding officer

against a party who fails to produce or induces another to fail to

produce subpoenaed documents.

Sec. 1780.28 Document subpoenas to nonparties.

(a) General rules. (1) Any party may apply to the presiding officer

for the issuance of a document discovery subpoena addressed to any

person who is not a party to the proceeding. The application must

contain a proposed document subpoena and a brief statement showing the

general relevance and reasonableness of the scope of documents sought.

The subpoenaing party shall specify a reasonable time, place and manner

for production in response to the subpoena.

[[Page 51039]]

(2) A party shall only apply for a document subpoena under this

section within the time period during which such party could serve a

discovery request under Sec. 1780.27. The party obtaining the document

subpoena is responsible for serving it on the subpoenaed person and for

serving copies on all parties. Document subpoenas may be served in any

State, territory, or possession of the United States, the District of

Columbia, or as otherwise provided by law.

(3) The presiding officer shall issue promptly any document

subpoena applied for under this section; except that, if the presiding

officer determines that the application does not set forth a valid

basis for the issuance of the subpoena, or that any of its terms are

unreasonable, oppressive, excessive in scope, or unduly burdensome, he

may refuse to issue the subpoena or may issue it in a modified form

upon such conditions as may be determined by the presiding officer.

(b) Motion to quash or modify. (1) Any person to whom a document

subpoena is directed may file a motion to quash or modify such

subpoena, accompanied by a statement of the basis for quashing or

modifying the subpoena. The movant shall serve the motion on all

parties and any party may respond to such motion within 10 days of

service of the motion.

(2) Any motion to quash or modify a document subpoena must be filed

on the same basis, including the assertion of privilege, upon which a

party could object to a discovery request under Sec. 1780.27 and during

the same time limits during which such an objection could be filed.

comply with any subpoena issued pursuant to this section or any order

of the presiding officer that directs compliance with all or any

portion of a document subpoena, the subpoenaing party or any other

aggrieved party may, to the extent authorized by applicable law, apply

to an appropriate United States district court for an order requiring

compliance with the subpoena. A party's right to seek court enforcement

of a document subpoena shall in no way limit the sanctions that may be

imposed by the presiding officer on a party who induces a failure to

comply with subpoenas issued under this section.

Sec. 1780.29 Deposition of witness unavailable for hearing.

(a) General rules. (1) If a witness will not be available for the

hearing, a party desiring to preserve that witness' testimony for the

record may apply in accordance with the procedures set forth in

paragraph (a)(2) of this section to the presiding officer for the

issuance of a subpoena, including a subpoena duces tecum, requiring the

attendance of the witness at a deposition. The presiding officer may

issue a deposition subpoena under this section upon a showing that--

(i) The witness will be unable to attend or may be prevented from

attending the hearing because of age, sickness, or infirmity, or will

be otherwise unavailable;

(ii) The witness' unavailability was not produced or caused by the

subpoenaing party;

(iii) The testimony is reasonably expected to be material; and

(iv) Taking the deposition will not result in any undue burden to

any other party and will not cause undue delay of the proceeding.

(2) The application must contain a proposed deposition subpoena and

a brief statement of the reasons for the issuance of the subpoena. The

subpoena must name the witness whose deposition is to be taken and

specify the time and place for taking the deposition. A deposition

subpoena may require the witness to be deposed anywhere within the

United States and its possessions and territories in which that witness

resides or has a regular place of employment or such other convenient

place as the presiding officer shall fix.

(3) Subpoenas must be issued promptly upon request, unless the

presiding officer determines that the request fails to set forth a

valid basis under this section for its issuance. Before making a

determination that there is no valid basis for issuing the subpoena,

the presiding officer shall require a written response from the party

requesting the subpoena or require attendance at a conference to

determine whether there is a valid basis upon which to issue the

requested subpoena.

(4) The party obtaining a deposition subpoena is responsible for

serving it on the witness and for serving copies of all parties. Unless

the presiding officer orders otherwise, no deposition under this

section shall be taken on fewer than 10 days' notice to the witness and

all parties. Deposition subpoenas may be served anywhere within the

United States or its possessions or territories on any person doing

business anywhere within the United States or its possessions or

territories, or as otherwise permitted by law.

(b) Objections to deposition subpoenas. (1) The witness and any

party who has not had an opportunity to oppose a deposition subpoena

issued under this section may file a motion under Sec. 1780.25 with the

presiding officer to quash or modify the subpoena prior to the time for

compliance specified in the subpoena, but not more than 10 days after

service of the subpoena.

(2) A statement of the basis for the motion to quash or modify a

subpoena issued under this section must accompany the motion. The

motion must be served on all parties.

to a deposition subpoena must be duly sworn and each party shall have

the right to examine the witness. Objections to questions or documents

must be in short form, stating the grounds for the objection. Failure

to object to questions or documents is not deemed a waiver except where

the ground for objection might have been avoided if the objection had

been presented timely. All questions, answers and objections must be

recorded.

(2) Any party may move before the presiding officer for an order

compelling the witness to answer any questions the witness has refused

to answer or submit any evidence that, during the deposition, the

witness has refused to submit.

(3) The deposition must be subscribed by the witness, unless the

parties and the witness, by stipulation, have waived the signing, or

the witness is ill, cannot be found, or has refused to sign. If the

deposition is not subscribed by the witness, the court reporter taking

the deposition shall certify that the transcript is a true and complete

transcript of the deposition.

(d) Enforcing subpoenas. If a subpoenaed person fails to comply

with any subpoena issued pursuant to this section or with any order of

the presiding officer made upon motion under paragraph (c)(2) of this

section, the subpoenaing party or other aggrieved party may, to the

extent authorized by applicable law, apply to an appropriate United

States district court for an order requiring compliance with the

portions of the subpoena that the presiding officer has ordered

enforced. A party's right to seek court enforcement of a deposition

subpoena in no way limits the sanctions that may be imposed by the

presiding officer on a party who fails to comply with or induces a

failure to comply with a subpoena issued under this section.

Sec. 1780.30 Interlocutory review.

(a) General rule. The Director may review a ruling of the presiding

officer prior to the certification of the record to the Director only

in accordance with the procedures set forth in this section.

[[Page 51040]]

(b) Scope of review. The Director may exercise interlocutory review

of a ruling of the presiding officer if the Director finds that--

(1) The ruling involves a controlling question of law or policy as

to which substantial grounds exist for a difference of opinion;

(2) Immediate review of the ruling may materially advance the

ultimate termination of the proceeding;

(3) Subsequent modification of the ruling at the conclusion of the

proceeding would be an inadequate remedy; or

(4) Subsequent modification of the ruling would cause unusual delay

or expense.

by a party with the presiding officer within 10 days of his ruling.

Upon the expiration of the time for filing all responses, the presiding

officer shall refer the matter to the Director for final disposition.

In referring the matter to the Director, the presiding officer may

indicate agreement or disagreement with the asserted grounds for

interlocutory review of the ruling in question.

(d) Suspension of proceeding. Neither a request for interlocutory

review nor any disposition of such a request by the Director under this

section suspends or stays the proceeding unless otherwise ordered by

the presiding officer or the Director.

Sec. 1780.31 Summary disposition.

(a) In general. The presiding officer shall recommend that the

Director issue a final order granting a motion for summary disposition

if the undisputed pleaded facts, admissions, affidavits, stipulations,

documentary evidence, matters as to which official notice may be taken

and any other evidentiary materials properly submitted in connection

with a motion for summary disposition show that--

There is no genuine issue as to any material fact; or

(2) The movant is entitled to a decision in its favor as a matter

of law.

(b) Filing of motions and responses. (1) Any party who believes

there is no genuine issue of material fact to be determined and that

such party is entitled to a decision as a matter of law may move at any

time for summary disposition in its favor of all or any part of the

proceeding. Any party, within 20 days after service of such motion or

within such time period as allowed by the presiding officer, may file a

response to such motion.

(2) A motion for summary disposition must be accompanied by a

statement of material facts as to which the movant contends there is no

genuine issue. Such motion must be supported by documentary evidence,

which may take the form of admissions in pleadings, stipulations,

written interrogatory responses, depositions, investigatory

depositions, transcripts, affidavits and any other evidentiary

materials that the movant contends support its position. The motion

must also be accompanied by a brief containing the points and

authorities in support of the contention of the movant. Any party

opposing a motion for summary disposition must file a statement setting

forth those material facts as to which such party contends a genuine

dispute exists. Such opposition must be supported by evidence of the

same type as that submitted with the motion for summary disposition and

a brief containing the points and authorities in support of the

contention that summary disposition would be inappropriate.

motion, the presiding officer may hear oral argument on the motion for

summary disposition.

(d) Decision on motion. Following receipt of a motion for summary

disposition and all responses thereto, the presiding officer shall

determine whether the movant is entitled to summary disposition. If the

presiding officer determines that summary disposition is warranted, the

presiding officer shall submit a recommended decision to that effect to

the Director, under Sec. 1780.53. If the presiding officer finds that

the moving party is not entitled to summary disposition, the presiding

officer shall make a ruling denying the motion.

Sec. 1780.32 Partial summary disposition.

If the presiding officer determines that a party is entitled to

summary disposition as to certain claims only, he shall defer

submitting a recommended decision as to those claims. A hearing on the

remaining issues must be ordered. Those claims for which the presiding

officer has determined that summary disposition is warranted will be

addressed in the recommended decision filed at the conclusion of the

hearing.

Sec. 1780.33 Scheduling of prehearing conferences.

(a) Scheduling conference. Within 30 days of service of the notice

or order commencing a proceeding or such other time as the parties may

agree, the presiding officer shall direct representatives for all

parties to meet with him in person at a specified time and place prior

to the hearing or to confer by telephone for the purpose of scheduling

the course and conduct of the proceeding. This meeting or telephone

conference is called a ``scheduling conference.'' The identification of

potential witnesses, the time for and manner of discovery and the

exchange of any prehearing materials including witness lists,

statements of issues, stipulations, exhibits and any other materials

may also be determined at the scheduling conference.

(b) Prehearing conferences. The presiding officer may, in addition

to the scheduling conference, on his own motion or at the request of

any party, direct representatives for the parties to meet with him (in

person or by telephone) at a prehearing conference to address any or

all of the following:

(1) Simplification and clarification of the issues;

(2) Stipulations, admissions of fact and the contents, authenticity

and admissibility into evidence of documents;

(3) Matters of which official notice may be taken;

(4) Limitation of the number of witnesses;

(5) Summary disposition of any or all issues;

(6) Resolution of discovery issues or disputes;

(7) Amendments to pleadings;

(8) Such other matters as may aid in the orderly disposition of the

proceeding.

require that a scheduling or prehearing conference be recorded by a

court reporter. A transcript of the conference and any materials filed,

including orders, becomes part of the record of the proceeding. A party

may obtain a copy of the transcript at such party's expense.

(d) Scheduling or prehearing orders. Within a reasonable time

following the conclusion of the scheduling conference or any prehearing

conference, the presiding officer shall serve on each party an order

setting forth any agreements reached and any procedural determinations

made.

Sec. 1780.34 Prehearing submissions.

(a) Within the time set by the presiding officer, but in no case

later than 10 days before the start of the hearing, each party shall

serve on every other party the serving party's--

(1) Prehearing statement;

(2) Final list of witnesses to be called to testify at the hearing,

including name and address of each witness and a short summary of the

expected testimony of each witness;

[[Page 51041]]

(3) List of the exhibits to be introduced at the hearing along with

a copy of each exhibit; and

(4) Stipulations of fact, if any.

(B) Effect of failure to comply. No witness may testify and no

exhibits may be introduced at the hearing if such witness or exhibit is

not listed in the prehearing submissions pursuant to paragraph (a) of

this section, except for good cause shown.

Sec. 1780.35 Hearing subpoenas.

(a) Issuance. (1) Upon application of a party showing general

relevance and reasonableness of scope of the testimony or other

evidence sought, the presiding officer may issue a subpoena or a

subpoena duces tecum requiring the attendance of a witness at the

hearing or the production of documentary or physical evidence at such

hearing. The application for a hearing subpoena must also contain a

proposed subpoena specifying the attendance of a witness or the

production of evidence from any state, commonwealth, possession,

territory of the United States, or the District of Columbia, or as

otherwise provided by law at any designated place where the hearing is

being conducted. The Party making the application shall serve a copy of

the application and the proposed subpoena on every other party.

(2) A party may apply for a hearing subpoena at any time before the

commencement of or during a hearing. During a hearing, a party may make

an application for a subpoena orally on the record before the presiding

officer.

(3) The presiding officer shall promptly issue any hearing subpoena

applied for under this section; except that, if the presiding officer

determines that the application does not set forth a valid basis for

the issuance of the subpoena, or that any of its terms are

unreasonable, oppressive, excessive in scope, or unduly burdensome, he

may refuse to issue the subpoena or may issue the subpoena in a

modified form upon any conditions consistent with this subpart. Upon

issuance by the presiding officer, the party making the application

shall serve the subpoena on the person named in the subpoena and on

each party.

(b) Motion to quash or modify. (1) Any person to whom a hearing

subpoena is directed or any party may file a motion to quash or modify

such subpoena, accompanied by a statement of the basis for quashing or

modifying the subpoena. The movant must serve the motion on each party

and on the person named in the subpoena. Any party may responded to the

motion within ten days of service of the motion.

(2) Any motion to quash or modify a hearing subpoena must be filed

prior to the time specified in the subpoena for compliance, but no more

than 10 days after the date of service of the subpoena upon the movant.

with any subpoena issued pursuant to this section or any order of the

presiding officer that directs compliance with all or any portion of a

hearing subpoena, the subpoenaing party or any other aggrieved party

may seek enforcement of the subpoena pursuant to Sec. 1780.28(c). A

party's right to seek court enforcement of a hearing subpoena shall in

no way limit the sanctions that may be imposed by the presiding officer

on a party who induces a failure to comply with subpoenas issued under

this section.

Subpart C--Hearing and Posthearing Proceedings

Sec. 1780.50 Conduct of hearings.

(a) General rules. (1) Hearings shall be conducted in accordance

with 5 U.S.C. chapter 5 and so as to provide a fair and expeditious

presentation of the relevant disputed issues. Except as limited by this

subpart, each party has the right to present its case or defense by

oral and documentary evidence and to conduct such cross examination as

may be required for full disclosure of the facts.

(2) Order of hearing. OFHEO's counsel of record shall present its

case-in-chief first, unless otherwise ordered by the presiding officer

or unless otherwise expressly specified by law or regulation. OFHEO's

counsel of record shall be the first party to present an opening

statement and a closing statement and may make a rebuttal statement

after the respondent's closing statement. If there are multiple

respondents, respondents may agree among themselves as to their order

or presentation of their cases, but if they do not agree, the presiding

officer shall fix the order.

(3) Examination of witnesses. Only one representative for each

party may conduct an examination of a witness, except that in the case

of extensive direct examination, the presiding officer may permit more

than one representative for the party presenting the witness to conduct

the examination. A party may have one representative conduct the direct

examination and another representative conduct re-direct examination of

a witness, or may have one representative conduct the cross examination

of a witness and another representative conduct the re-cross

examination of a witness.

(4) Stipulations. Unless the presiding officer directs otherwise,

all documents that the parties have stipulated as admissible shall be

admitted into evidence upon commencement of the hearing.

(b) Transcript. The hearing shall be recorded and transcribed. The

transcript shall be made available to any party upon payment of the

cost thereof. The presiding officer shall have authority to order the

record corrected, either upon motion to correct, upon stipulation of

the parties, or following notice to the parties upon the presiding

officer's own motion.

Sec. 1780.51 Evidence.

(a) Admissibility. (1) Except as is otherwise set forth in this

section, relevant, material and reliable evidence that is not unduly

repetitive is admissible to the fullest extent authorized by the

Administrative Procedures Act and other applicable law.

(2) Evidence that would be admissible under the Federal Rules of

Evidence is admissible in a proceeding conducted pursuant to this

subpart.

(3) Evidence that would be inadmissible under the Federal Rules of

Evidence may not be deemed or ruled to be inadmissible in a proceeding

conducted pursuant to this subpart if such evidence is relevant,

material, reliable and not unduly repetitive.

(b) Official notice. (1) Official notice may be taken of any

material fact that may be judicially noticed by a United States

district court and any material information in the official public

records of any Federal or State government agency.

(2) All matters officially noticed by the presiding officer or the

Director shall appear on the record.

(3) If official notice is requested of any material fact, the

parties, upon timely request, shall be afforded an opportunity to

object.

the same extent as the original, unless a genuine issue is raised as to

whether the copy is in some material respect not a true and legible

copy of the original.

(2) Subject to the requirements of paragraph (a)(1) of this

section, any document, including a report of examination, oversight

activity, inspection, or visitation, prepared by OFHEO or by another

Federal or State financial institutions regulatory agency is admissible

either with or without a sponsoring witness.

(3) Witnesses may use existing or newly created charts, exhibits,

calendars, calculations, outlines, or

[[Page 51042]]

other graphic material to summarize, illustrate, or simplify the

presentation of testimony. Such materials may, subject to the presiding

officer's discretion, be used with or without being admitted into

evidence.

(d) Objections. (1) Objections to the admissibility of evidence

must be timely made and rulings on all objections must appear in the

record.

(2) When an objection to a question or line of questioning is

sustained, the examining representative of record may make a specific

proffer on the record of what he expected to prove by the expected

testimony of the witness. The proffer may be by representation of the

representative or by direct interrogation of the witness.

(3) The presiding officer shall retain exhibits, adequately marked

for identification, for the record and transmit, such exhibits to the

Director.

(4) Failure to object to admission of evidence or to any ruling

constitutes a waiver of the objection.

(e) Stipulations. The parties may stipulate as to any relevant

matters of fact or the authentication of any relevant documents. Such

stipulations must be received in evidence at a hearing and are binding

on the parties with respect to the matters therein stipulated.

(f) Depositions of unavailable witnesses. (1) If a witness is

unavailable to testify at a hearing and that witness has testified in a

deposition in accordance with Sec. 1780.29, a party may offer as

evidence all or any part of the transcript of the deposition, including

deposition exhibits, if any.

(2) Such deposition transcript is admissible to the same extent

that testimony would have been admissible had that person testified at

the hearing, provided that if a witness refused to answer proper

questions during the depositions, the presiding officer may, on that

basis, limit the admissibility of the deposition in any manner that

justice requires.

(3) Only those portions of a deposition received in evidence at the

hearing constitute a part of the record.

Sec. 1780.52 Post hearing filings.

(a) Proposed findings and conclusions and supporting briefs. (1)

Using the same method of service for each party, the presiding officer

shall serve notice upon each party that the certified transcript,

together with all hearing exhibits and exhibits introduced but not

admitted into evidence at the hearing, has been filed. Any party may

file with the presiding officer proposed findings of fact, proposed

conclusions of law and a proposed order within 30 days after the

parties have received notice that the transcript has been filed with

the presiding officer, unless otherwise ordered by the presiding

officer.

(2) Proposed findings and conclusions must be supported by citation

to any relevant authorities and by page references to any relevant

portions of the record. A posthearing brief may be filed in support of

proposed findings and conclusions, either as part of the same document

or in a separate document.

(3) Any party is deemed to have waived any issue not raised in

proposed findings or conclusions timely filed by that party.

(b) Reply briefs. Reply briefs may be filed within 15 days after

the date on which the parties' proposed findings and conclusions and

proposed order are due. Reply briefs must be limited strictly to

responding to new matters, issues, or arguments raised in another

party's papers. A party who has not filed proposed findings of fact and

conclusions of law or a posthearing brief may not file a reply brief.

order the filing by any party of any brief or reply brief supporting

proposed findings and conclusions in advance of the other party's

finding of its brief.

Sec. 1780.53 Recommended decision and filing of record.

(a) Filing of recommended decision and record. Within 45 days after

expiration of the time allowed for filing reply briefs under

Sec. 1780.52(b), the presiding officer shall file with and certify to

the Director, for decision, the record of the proceeding. The record

must include the presiding officer's recommended decision, recommended

findings of fact and conclusions of law, and proposed order; all

prehearing and hearing transcripts, exhibits and rulings; and the

motions, briefs, memoranda and other supporting papers filed in

connection with the hearing. The presiding officer shall serve upon

each party the recommended decision, recommended findings and

conclusions, and proposed order.

(b) Filing of index. At the same time the presiding officer files

with and certifies to the Director for final determination the record

of the proceeding, the presiding officer shall furnish to the Director

a certified index of the entire record of the proceeding. The certified

index shall include, at a minimum, an entry for each paper, document or

motion filed with the presiding officer in the proceeding, the date of

the filing, and the identity of the filer. The certified index shall

also include an exhibit index containing, at a minimum, an entry

consisting of exhibit number and title or description for: Each exhibit

introduced and admitted into evidence at the hearing; each exhibit

introduced but not admitted into evidence at the hearing; and each

exhibit introduced and admitted into evidence after the completion of

the hearing; and each exhibit introduced but not admitted into evidence

after the completion of the hearing.

Sec. 1780.54 Exceptions to recommended decision.

(a) Filing exceptions. Within 30 days after service of the

recommended decision, recommended findings and conclusions, and

proposed order under Sec. 1780.53, a party may file with the Director

written exceptions to the presiding officer's recommended decision,

recommended findings and conclusions, or proposed order; to the

admission or exclusion of evidence; or to the failure of the presiding

officer to make a ruling proposed by a party. A supporting brief may be

filed at the time the exceptions are filed, either as part of the same

document or in a separate document.

(b) Effect of failure to file or raise exceptions. (a) Failure of a

party to file exceptions to those matters specified in paragraph (a) of

this section within the time prescribed is deemed a waiver of objection

thereto.

(2) No exception need be considered by the Director if the party

taking exception had an opportunity to raise the same objection, issue,

or argument before the presiding officer and failed to do so.

exceptions must be confined to the particular matters in or omissions

from the presiding officer's recommendations to which that party takes

exception.

(2) All exceptions and briefs in support of exceptions must set

forth page or paragraph references to the specific parts of the

presiding officer's recommendations to which exception is taken, the

page or paragraph references to those portions of the record relied

upon to support each exception and the legal authority relied upon to

support each exception. Exceptions and briefs in support shall not

exceed a total of 30 pages, except by leave of the Director on motion.

(3) One reply brief may be submitted by each party within 10 days

of service of exceptions and briefs in support of exceptions. Reply

briefs shall not exceed 15 pages, except by leave of the Director on

motion.

[[Page 51043]]

Sec. 1780.55 Review by Director.

(a) Notice of submission to the Director. When the Director

determines that the record in the proceeding is complete, the Director

shall serve notice upon the parties that the proceeding has been

submitted to the Director for final decision.

(b) Oral argument before the Director. Upon the initiative of the

Director or on the written request of any party filed with the Director

within the time for filing exceptions under Sec. 1780.54, the Director

may order and hear oral argument on the recommended findings,

conclusions, decision and order of the presiding officer. A written

request by a party must show good cause for oral argument and state

reasons why arguments cannot be presented adequately in writing. A

denial of a request for oral argument may be set forth in the

Director's final decision. Oral argument before the Director must be

transcribed.

and assist the Director in the consideration and disposition of the

case. The final decision of the Director will be based upon review of

the entire record of the proceeding, except that the Director may limit

the issues to be reviewed to those findings and conclusions to which

opposing arguments or exceptions have been filed by the parties.

(2) The Director shall render a final decision and issue an

appropriate order within 90 days after notification of the parties that

the case has been submitted for final decision, unless the Director

orders that the action or any aspect thereof be remanded to the

presiding officer for further proceedings. Copies of the final decision

and order of the Director shall be served upon each party to the

proceeding and upon other persons required by statute.

Sec. 1780.56 Exhaustion of administrative remedies.

To exhaust administrative remedies as to any issue on which a party

disagrees with the presiding officer's recommendations, a party must

file exceptions with the Director under Sec. 1780.54. A party must

exhaust administrative remedies as a precondition to seeking judicial

review of any decision issued under this subpart.

Sec. 1780.57 Stays pending judicial review.

The commencement of proceedings for judicial review of a final

decision and order of the Director may not, unless specifically ordered

by the Director or a reviewing court, operate as a stay of any order

issued by the Director. The Direct may, in his discretion and on such

terms as he finds just, stay the effectiveness of all or any part of an

order of the Director pending a final decision on a petition for review

of that order.

Subpart D--Rules of Practice Before the Office of Federal Housing

Enterprise Oversight

Sec. 1780.70 Scope.

This subpart contains rules governing practice by parties or their

representatives before OFHEO. This subpart addresses the imposition of

sanctions by the presiding officer or the Director against parties or

their representatives in an adjudicatory proceeding under this part.

This subpart also covers other disciplinary sanctions--censure,

suspension or disbarment--against individuals who appear before OFHEO

in a representational capacity either in an adjudicatory proceeding

under this part or in any other matters connected with presentations to

OFHEO relating to a client's or other principal's rights, privileges,

or liabilities. This representation includes, but is not limited to,

the practice of attorneys and accountants. Employees of OFHEO are not

subject to disciplinary proceedings under this subpart.

Sec. 1780.71 Definitions.

Practice before OFHEO for the purposes of this subpart, includes,

but not is limited to, transacting any business with OFHEO as counsel,

representative or agent for any other person, unless the Director

orders otherwise. Practice before OFHEO also includes the preparation

of any statement, opinion, or other paper by a counsel, representative

or agent that is filed with OFHEO in any certification, notification,

application, report, or other document, with the consent of such

counsel, representative or agent. Practice before OFHEO does not

include work prepared for an Enterprise solely at its request for use

in the ordinary course of its business.

Sec. 1780.72 Appearance and practice in adjudicatory proceedings.

(a) Appearance before OFHEO or a presiding officer. (1) By

attorneys. A party may be represented by an attorney who is a member in

good standing of the bar of the highest court of any State,

commonwealth, possession, territory of the United States, or the

District of Columbia and who is not currently suspended or disbarred

from practice before OFHEO.

(2) By nonattorneys. An individual may appear on his own behalf. A

member of a partnership may represent the partnership and a duly

authorized officer, director, employee, or other agent of any

corporation or other entity not specifically listed herein may

represent such operations or other entity; provided that such officer,

director, employee, or other agent is not currently suspended or

disbarred from practice before OFHEO. A duly authorized officer or

employee of any government unit, agency, or authority may represent

that unit, agency, or authority.

(b) Notice of appearance. Any person appearing in a representative

capacity on behalf of a party, including OFHEO, shall execute and file

a notice of appearance with the presiding officer at or before the time

such person submits papers or otherwise appears on behalf of a party in

the adjudicatory proceeding. Such notice of appearance shall include a

written declaration that the individual is currently qualified as

provided in paragraph (a)(1) or (a)(2) of this section and is

authorized to represent the particular party. By filing a notice of

appearance on behalf of a party in an adjudicatory proceeding, the

representative thereby agrees and represents that he is authorized to

accept service on behalf of the represented party and that, in the

event of withdrawal from representation, he or she will, if required by

the presiding officer, continue to accept service until a new

representative has filed a notice of appearance or until the

represented party indicates that he or she will proceed on a pro se

basis. Unless the representative filing the notice is an attorney, the

notice of appearance shall also be executed by the person represented

or, if the person is not an individual, by the chief executive officer,

or duly authorized officer of that person.

Sec. 1780.73 Conflicts of interest.

(a) Conflict of interest in representation. No representative shall

represent another person in an adjudicatory proceeding if it reasonably

appears that such representation may be limited materially by that

representative's responsibilities to a third person or by that

representative's own interests. The presiding officer may take

corrective measures at any stage of a proceeding to cure a conflict of

interest in representation, including the issuance of an order limiting

the scope of representation or disqualifying an individual from

appearing in a representative capacity for the duration of the

proceeding.

(b) Certification and waiver. If any person appearing as counsel or

other

[[Page 51044]]

representative represents two or more parties to an adjudicatory

proceeding or also represents a nonparty on a matter relevant to an

issue in the proceeding, that representative must certify in writing at

the time of filing the notice of appearance required by Sec. 1780.72--

(1) That the representative has personally and fully discussed the

possibility of conflicts of interest with each such party and nonparty;

(2) That each such party and nonparty waives any right it might

otherwise have had to assert any known conflicts of interest or to

assert any non-material conflicts of interest during the course of the

proceeding.

Sec. 1780.74 Sanctions.

(a) General rule. Appropriate sanctions may be imposed during the

course of any proceeding when any party or representative of record has

acted or failed to act in a manner required by applicable statute,

regulation, or order, and that act or failure to act--

(1) Constitutes contemptuous conduct;

(2) Has caused some other party material and substantive injury,

including, but not limited to, incurring expenses including attorney's

fees or experiencing prejudicial delay;

(3) Is a clear and unexcused violation of an applicable statute,

regulation, or order; or

(4) Has delayed the proceeding unduly.

(b) Sanctions. Sanctions that may be imposed include, but are not

limited to, any one or more of the following:

(1) Issuing an order against a party;

(2) Rejecting or striking any testimony or documentary evidence

offered, or other papers filed, by the party;

(3) Precluding the party from contesting specific issues or

findings;

(4) Precluding the party from offering certain evidence or from

challenging or contesting certain evidence offered by another party;

(5) Precluding the party from making a late filing or conditioning

a late filing on any terms that are just;

(6) Assessing reasonable expenses, including attorney's fees,

incurred by any other party as a result of the improper action or

failure to act.

officer, on the motion of any party, or on his own motion, may impose

any sanction authorized by this section. The presiding officer shall

submit to the Director for final ruling any sanction that would result

in a final order that terminates the case on the merits or is otherwise

dispositive of the case.

(2) No sanction authorized by this section, other than refusing to

accept late papers, shall be imposed without prior notice to all

parties and an opportunity for any representative or party against whom

sanctions would be imposed to be heard. The presiding officer shall

determine and direct the appropriate notice and form for such

opportunity to be heard. The opportunity to be heard may be limited to

an opportunity to respond verbally, immediately after the act or

inaction in question is noted by the presiding officer.

(3) For purposes of interlocutory review, motions for the

imposition of sanctions by any party and the imposition of sanctions

shall be treated the same as motions for any other ruling by the

presiding officer.

(4) Nothing in this section shall be read to preclude the presiding

officer or the Director from taking any other action or imposing any

other restriction or sanction authorized by any applicable statute or

regulation.

Sec. 1780.75 Censure, suspension, disbarment and reinstatement.

(a) Discretionary censure, suspension and disbarment. (1) The

Director may censure any representative or other individual or suspend

or revoke the privilege to appear or practice before OFHEO of any

representative or other individual if, after notice of and opportunity

for hearing in the matter, that individual is found by the Director--

(i) Not to possess the requisite qualifications or competence to

represent others;

(ii) To be seriously lacking in character or integrity or to have

engaged in material unethical or improper professional conduct;

(iii) To have caused unfair and material injury or prejudice to

another party, such as prejudicial delay or unnecessary expenses

including attorney's fees;

(iv) To have engaged in, or aided and abetted, a material and

knowing violation of the 1992 Act, the Federal Home Loan Mortgage

Corporation Act, the Federal National Mortgage Association Charter Act

or the rules or regulations issued under those statutes or any other

law or regulation governing Enterprise operations;

(v) To have engaged in contemptuous conduct before OFHEO;

(vi) With intent to defraud in any manner, to have willfully and

knowingly deceived, misled, or threatened any client or prospective

client; or

(vii) Within the last 10 years, to have been convicted of an

offense involving moral turpitude, dishonesty or breach of trust, if

the conviction has not been reversed on appeal. A conviction within the

meaning of this paragraph shall be deemed to have occurred when the

convicting court enters its judgment or order, regardless of whether an

appeal is pending or could be taken and includes a judgment or an order

on a plea of nolo contendere or on consent, regardless of whether a

violation is admitted in the consent.

(2) Suspension or revocation on the grounds set forth in paragraphs

(a)(1) (ii), (iii), (iv), (v), (vi), and (vii) of this section shall

only be ordered upon a further finding that the individual's conduct or

character was sufficiently egregious as to justify suspension or

revocation. Suspension or disbarment under this paragraph shall

continue until the applicant has been reinstated by the Director for

good cause shown or until, in the case of a suspension, the suspension

period has expired.

(3) if the final order against the respondent is for censure, the

individual may be permitted to practice before OFHEO, but such

individual's future representations may be subject to conditions

designed to promote high standards of conduct. If a written letter of

censure is issued, a copy will be maintained in OFHEO's files.

(b) Mandatory suspension and disbarment. (1) Any counsel who has

been and remains suspended or disbarred by a court of the United States

or of any State, commonwealth, possession, territory of the United

States or the District of Columbia; any accountant or other licensed

expert whose license to practice has been revoked in any State,

commonwealth, possession, territory of the United or the District of

Columbia; any person who has been and remains suspended or barred from

practice before the Department of Housing and Urban Development, the

Office of the Comptroller of the Currency, the Board of Governors of

the Federal Reserve System, the Office of Thrift Supervision, the

Federal Deposit Insurance Corporation, the National Credit Union

Administration, the Federal Housing Finance Board, the Farm Credit

Administration, the Securities and Exchange Commission, or the

Commodity Futures Trading Commission is also suspended automatically

from appearing or practicing before OFHEO. A disbarment or suspension

within the meaning of this paragraph shall be deemed to have occurred

when the disbarring or suspending agency or tribunal enters its

[[Page 51045]]

judgment or order, regardless of whether an appeal is pending or could

be taken and regardless of whether a violation is admitted in the

consent.

(2) A suspension or disbarment from practice before OFHEO under

paragraph (b)(1) of this section shall continue until the person

suspended or disbarred is reinstated under paragraph (d)(2) of this

section.

before OFHEO who is the subject of an order, judgment, decree, or

finding of the types set forth in paragraph (b)(1) of this section

shall file promptly with the Director a copy thereof, together with any

related opinion or statement of the agency or tribunal involved.

(2) Any individual appearing or practicing before OFHEO who is or

within the last 10 years has been convicted of a felony or of a

misdemeanor that resulted in a sentence of prison term or in a fine or

restitution order totaling more than $5,000 shall file a notice

promptly with the Director. The notice shall include a copy of the

order imposing the sentence or fine, together with any related opinion

or statement of the court involved.

(d) Reinstatement. (1) Unless otherwise ordered by the Director, an

application for reinstatement for good cause may be made in writing by

a person suspended or disbarred under paragraph (a)(1) of this section

at any time more than 3 years after the effective date of the

suspension or disbarment and, thereafter, at any time more than 1 year

after the person's most recent application for reinstatement. An

applicant for reinstatement under this paragraph (d)(1) of this section

may, in the Director's sole discretion, be afforded a hearing.

(2) An application for reinstatement for good cause by any person

suspended or disbarred under paragraph (b)(1) of this section may be

filed at any time, but not less than 1 year after the applicant's most

recent application. An applicant for reinstatement for good cause under

this paragraph (d)(2) may, in the Director's sole discretion, be

afforded a hearing. However, if all the grounds for suspension or

disbarment under paragraph (b)(1) of this section have been removed by

a reversal of the order of suspension or disbarment or by termination

of the underlying suspension or disbarment, any person suspended or

disbarred under paragraph (b)(1) of this section may apply immediately

for reinstatement and shall be reinstated by OFHEO upon written

application notifying OFHEO that the grounds have been removed.

(e) Conferences. (1) General. The presiding officer may confer with

a proposed respondent concerning allegations of misconduct or other

grounds for censure, disbarment or suspension, regardless of whether a

proceeding for censure, disbarment or suspension has been commenced. If

a conference results in a stipulation in connection with a proceeding

in which the individual is the respondent, the stipulation may be

entered in the record at the request of either party to the proceeding.

(2) Resignation or voluntary suspension. In order to avoid the

institution of or a decision in a disbarment or suspension proceeding,

a person who practices before OFHEO may consent to censure, suspension

or disbarment from practice. At the discretion of the Director, the

individual may be censured, suspended or disbarred in accordance with

the consent offered.

(f) Hearings under this section. Hearings conducted under this

section shall be conducted in substantially the same manner as other

hearings under this part, provided that in proceedings to terminate an

existing OFHEO suspension or disbarment order, the person seeking the

termination of the order shall bear the burden of going forward with an

application and with proof and that the Director may, in the Director's

sole discretion, direct that any proceeding to terminate an existing

suspension or disbarment by OFHEO be limited to written submissions.

All hearings held under this section shall be closed to the public

unless the Director, on the Director's own motion or upon the request

of a party, otherwise directs.

(g) Sanctions for contemptuous conduct. If, during the course of

any proceeding, a presiding officer finds any representative or any

individual representing himself to have engaged in contemptuous

conduct, the presiding officer may summarily suspend that individual

from participating in that or any related proceeding or impose any

other appropriate sanction. Contemptuous conduct includes dilatory,

obstructionist, egregious, contumacious, unethical, or other improper

conduct at any phase of any adjudicatory proceeding.

Mark A. Kinsey,

Acting Director, Office of Federal Housing Enterprise Oversight.

[FR Doc. 98-25527 Filed 9-23-98; 8:45 am]

BILLING CODE 4220-01-M

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.