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Title 12 — Banks and BankingRelease 119-73not60

§1731a Penalties

Title 12 › Chapter 13— NATIONAL HOUSING › Subchapter V— MISCELLANEOUS › § 1731a

Last updated Apr 3, 2026|Official source

Summary

The Secretary can bar a person or company from getting participation benefits under subchapter I, II, VI, VII, VIII, IX–B, or X of this chapter. This covers people acting directly (as an insured lender or borrower) or indirectly (as a builder, contractor, dealer, or sales agent). The Secretary may do this if the person or firm (1) knowingly or willfully broke this chapter, title III of the Servicemen’s Readjustment Act of 1944 (as amended), chapter 37 of title 38, or rules made under them; (2) in work financed under those laws violated any federal or state criminal law; or (3) failed in a major way to complete or properly carry out contract work paid for under those laws. Before any ban, the Secretary must give written notice. The person or firm can ask in writing for a detailed list of charges and must be allowed a hearing and a lawyer. The Secretary’s decision must be 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

Apr 3, 2026

Release point: 119-73not60