CIVIL MONEY PENALTIES AGAINST GENERAL PARTNERS, OFFICERS, DIRECTORS, AND CERTAIN MANAGING AGENTS OF MULTIFAMILY PROJECTS.

SEC. 561. CIVIL MONEY PENALTIES AGAINST GENERAL PARTNERS, OFFICERS, DIRECTORS, AND CERTAIN MANAGING AGENTS OF MULTIFAMILY PROJECTS. (a) Civil Money Penalties Against Multifamily Mortgagors.—Section 537 of the National Housing Act (12 U.S.C. 1735f-15) is amended— (1) in subsection (b)(1), by striking “on that mortgagor” and inserting “on that mortgagor, on a general partner of a partnership mortgagor, or on any officer or director of a corporate mortgagor”; (2) in subsection (c)— (A) by striking the subsection heading and inserting the following: “(c) Other Violations.—”; and (B) in paragraph (1)—111 STAT. 1415 (i) by striking “Violations.—The Secretary may” and all that follows through the colon and inserting the following: “(A) Liable parties.—The Secretary may also impose a civil money penalty under this section on— “(i) any mortgagor of a property that includes 5 or more living units and that has a mortgage insured, coinsured, or held pursuant to this Act; “(ii) any general partner of a partnership mortgagor of such property; “(iii) any officer or director of a corporate mortgagor; “(iv) any agent employed to manage the property that has an identity of interest with the mortgagor, with the general partner of a partnership mortgagor, or with any officer or director of a corporate mortgagor of such property; or “(v) any member of a limited liability company that is the mortgagor of such property or is the general partner of a limited partnership mortgagor or is a partner of a general partnership mortgagor. “(B) Violations.—A penalty may be imposed under this section upon any liable party under subparagraph (A) that knowingly and materially takes any of the following actions:”; (ii) in subparagraph (B), as designated by clause (i), by redesignating the subparagraph designations (A) through (L) as clauses (i) through (xii), respectively; (iii) by adding after clause (xii), as redesignated by clause (ii), the following: “(xiii) Failure to maintain the premises, accommodations, any living unit in the project, and the grounds and equipment appurtenant thereto in good repair and condition in accordance with regulations and requirements of the Secretary, except that nothing in this clause shall have the effect of altering the provisions of an existing regulatory agreement or federally insured mortgage on the property. “(xiv) Failure, by a mortgagor, a general partner of a partnership mortgagor, or an officer or director of a corporate mortgagor, to provide management for the project that is acceptable to the Secretary pursuant to regulations and requirements of the Secretary. “(xv) Failure to provide access to the books, records, and accounts related to the operations of the mortgaged property and of the project.”; and (iv) in the last sentence, by deleting “of such agreement” and inserting “of this subsection”; (3) in subsection (d)— (A) in paragraph (1)(B), by inserting after “mortgagor” the following: “, general partner of a partnership mortgagor, officer or director of a corporate mortgagor, or identity of interest agent employed to manage the property”; and (B) by adding at the end the following: “(5) Payment of penalty.—No payment of a civil money penalty levied under this section shall be payable out of project income.”;111 STAT. 1416 (4) in subsection (e)(1), by deleting “a mortgagor” and inserting “an entity or person”; (5) in subsection (f), by inserting after “mortgagor” each place such term appears the following: “, general partner of a partnership mortgagor, officer or director of a corporate mortgagor, or identity of interest agent employed to manage the property”; (6) by striking the heading of subsection (f) and inserting the following: “Civil Money Penalties Against Multifamily Mortgagors, General Partners of Partnership Mortgagors, Officers and Directors of Corporate Mortgagors, and Certain Managing Agents”; and (7) by adding at the end the following: “(k) Identity of Interest Managing Agent.—In this section, the terms ‘agent employed to manage the property that has an identity of interest’ and ‘identity of interest agent’ mean an entity— “(1) that has management responsibility for a project; “(2) in which the ownership entity, including its general partner or partners (if applicable) and its officers or directors (if applicable), has an ownership interest; and “(3) over which the ownership entity exerts effective control.”. (b) Implementation.— (1) Public comment.—The Secretary shall implement the amendments made by this section by regulation issued after notice and opportunity for public comment. The notice shall seek comments primarily as to the definitions of the terms “ownership interest in” and “effective control”, as those terms are used in the definition of the terms “agent employed to manage the property that has an identity of interest” and “identity of interest agent”. (2) Timing.—A proposed rule implementing the amendments made by this section shall be published not later than 1 year after the date of enactment of this Act. (c) Applicability of Amendments.—The amendments made by subsection (a) shall apply only with respect to— (1) violations that occur on or after the effective date of the final regulations implementing the amendments made by this section; and (2) in the case of a continuing violation (as determined by the Secretary of Housing and Urban Development), any portion of a violation that occurs on or after that date.