Title 12, Banks and BankingRelease 119-102
§1731a Penalties
Title 12 › CHAPTER 13 — NATIONAL HOUSING › SUBCHAPTER V — MISCELLANEOUS › § 1731a
Summary
The Secretary may refuse participation benefits under subchapters I, II, VI, VII, VIII, IX–B, or X to any person or firm. That can happen if the person knowingly or willfully breaks this chapter, title III of the Servicemen’s Readjustment Act of 1944 (as amended), chapter 37 of title 38, or related regulations; or if they commit a federal or state criminal offense tied to construction or financing; or if they fail in a major way to meet contract duties to finish work paid for under those laws. Before denying benefits, the Secretary must send a written notice. The person or firm can ask for a written list of charges, a hearing, and a lawyer. Decisions are based on the preponderance of the evidence. A properly mailed notice to the last known address is treated as received.
Full Legal Text
Title 12, §1731a
Banks and Banking, Source: USLM XML via OLRC
Notwithstanding any other provision of law, the Secretary is authorized to refuse the benefits of participation (either directly as an insured lender or as a borrower, or indirectly as a builder, contractor, or dealer, or salesman or sales agent for a builder, contractor or dealer) under subchapter I, II, VI, VII, VIII, IX–B, or X of this chapter to any person or firm (including but not limited to any individual, partnership, association, trust, or corporation) if the Secretary has determined that such person or firm (1) has knowingly or willfully violated any provision of this chapter or of title III of the Servicemen’s Readjustment Act of 1944, as amended, or of chapter 37 of title 38, or of any regulation issued by the Secretary under this chapter or by the Secretary of Veterans Affairs under said title III, or chapter 37, or (2) has, in connection with any construction, alteration, repair or improvement work financed with assistance under this chapter or under said title III, or chapter 37, or in connection with contracts or financing relating to such work, violated any Federal or State penal statute, or (3) has failed materially to properly carry out contractual obligations with respect to the completion of construction, alteration, repair, or improvement work financed with assistance under this chapter or under title III of the Servicemen’s Readjustment Act of 1944, as amended, or of chapter 37 of title 38. Before any such determination is made any person or firm with respect to whom such a determination is proposed shall be notified in writing by the Secretary and shall be entitled, upon making a written request to the Secretary, to a written notice specifying charges in reasonable detail and an opportunity to be heard and to be represented by counsel. Determinations made by the Secretary under this section shall be based on the preponderance of the evidence. For the purposes of compliance with this section the Secretary’s notice of a proposed determination under this section shall be considered to have been received by the interested person or firm if the notice is properly mailed to the last known address of such person or firm.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Servicemen’s Readjustment Act of 1944, as amended, referred to in text, is act June 22, 1944, ch. 268, 58 Stat. 284. Title III of the Servicemen’s Readjustment Act of 1944 was classified generally to subchapter II (§ 694 et seq.) of chapter 11C of former Title 38, Pensions, Bonuses, and Veterans’ Relief, and was repealed by section 14(87) of Pub. L. 85–857, Sept. 2, 1958, 72 Stat. 1273, the first section of which reenacted title III of such Act as chapter 37 (§ 1801 [now 3701] et seq.) of Title 38, Veterans’ Benefits.
Prior Provisions
A prior section 512 of act of
June 27, 1934, related to offenses and penalties, and was classified to section 1731 of this title, prior to repeal by act
June 25, 1948, ch. 645, § 21, 62 Stat. 862, eff. Sept. 1, 1948. See note under section 1731.
Amendments
1991—Pub. L. 102–54 substituted “Secretary of Veterans Affairs” for “Administrator of Veterans’ Affairs”. 1989—Pub. L. 101–235 struck out reference to subchapter IX–A after reference to subchapter VIII. 1984—Pub. L. 98–479 substituted “Penalties” for “Denial of benefits in cases of abuses; determination by Secretary; notice and hearing” in section catchline. 1967—Pub. L. 90–16 substituted “Secretary” for “Commissioner” wherever appearing, and “Secretary’s” for “Commissioner’s”. 1966—Pub. L. 89–754 inserted references to subchapters IX–A and IX–B of this chapter. 1959—Pub. L. 86–372 provided that for purposes of compliance with this section the Commissioner’s notice of a proposed determination under this section shall be considered to have been received by the interested person or firm if the notice is properly mailed to the last known address of such person or firm. 1958—Pub. L. 85–857 inserted references to chapter 37 of title 38.
Statutory Notes and Related Subsidiaries
Effective Date
of 1958 AmendmentAmendment by Pub. L. 85–857 effective Jan. 1, 1959, see section 2 of Pub. L. 85–857, set out as an
Effective Date
note preceding part I of Title 38, Veterans’ Benefits.
Reference
Citations & Metadata
Citation
12 U.S.C. § 1731a
Title 12, Banks and Banking
Last Updated
Aug 21, 2026
Release point: 119-102