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U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

May 31, 1988
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 88-19
TO:     ALL APPROVED MORTGAGEES
SUBJECT:        Employment of Individuals That Have Been Debarred,
                Suspended or the Subject of a Limited Denial of
                Participation
 
        The purpose of this Mortgagee Letter is to reemphasize the
Department's policy concerning employment by approved mortgagees of
individuals that have been suspended, debarred or the subject of a
limited Denial of Participation under the provisions of HUD's
regulations at 24 CFR Part 24.
 
        Approved mortgagees may not employ any individual or entity
whose duties involve, directly or indirectly, programs administered
by HUD where the mortgagee knows or should have known that the
individual or entity is debarred, suspended or the subject of a
Limited Denial of Participation.  The Department will affirmatively
seek administrative sanctions, including withdrawal of HUD-FHA
approval, against mortgagees that do not comply with this policy.
 
        The Department expects all mortgagees to check the
Consolidated List of Debarred, Suspended and Ineligible Contractors
and Grantees as well as confirming eligibility with the applicant,
when employing individuals in their HUD-FHA insured mortgage
operations.  This List is mailed by the Department to all mortgagees
approved for the Direct Endorsement program. Mortgagees not approved
for the Direct Endorsement program should contact the local HUD Field
Office for specific information concerning suspended and debarred
individuals and entities on this list.  The imposition of a Limited
Denial of Participation is an action that is taken by the local HUD
Field Office.  Mortgagees should check with the HUD office in their
jurisdiction for information concerning individuals who may be
subject to such action.
 
        HUD places great reliance on all approved mortgagees to
maintain effective quality control procedures with respect to their
HUD-FHA insured mortgage operations.  We view the exclusion of
individuals who have been debarred, suspended or the subject of a
Limited Denial of Participation from the HUD-FHA mortgage insurance
 
programs as an important element in a mortgagee's quality controls.
Your support and cooperation will assist us in reducing the risk that
such individuals pose to the integrity of our programs.
 
        Should you have further questions, you may contact Andrew
Zirneklis, Office of Lender Activities and Land Sales Registration at
(202) 755-6924.
 
                                Sincerely yours,
                                Thomas T. Demery
                                Assistant Secretary