Section 4.12. Omissions and material errors as grounds for suspension of authorized lenders.

 

(1)   Grounds for suspension. The department may suspend any authorized lender who makes excessive omissions or material errors on loan application packages the authorized lender submits to the department. An error is material if it prevents, or would prevent if the loan application package were not subsequently withdrawn, the correct processing to final determination of the loan application package as submitted. A loan application package is any loan application together with all supporting documents required by the department which is submitted to the department for processing, whether or not the loan application package is subsequently withdrawn before final determination by the department. For purposes of this section, an appeal of a loan denial is a new and separate loan application package.

(2)   Notice of excessive omissions and material errors. The department shall give notice to any authorized lender who has submitted loan application packages with excessive accumulated omissions and material errors that the authorized lender may be suspended if the lender fails to properly complete loan application packages submitted thereafter. At the request of any authorized lender, the department shall instruct the authorized lender as to how to properly complete loan application packages.

(3)   Procedure for suspension. If the secretary determines that an authorized lender, who has been given notice pursuant to sub. (2) , has made excessive accumulated omissions and material errors on loan application packages it has submitted after receiving the notice, the secretary may give notice to the lender that the lender is temporarily suspended from originating primary housing loans. The notice of temporary suspension shall be sent by certified mail, return receipt requested. The notice of temporary suspension is effective 5 days after it is mailed, except for applications which the authorized lender commenced processing prior to the effective date of the temporary suspension. The notice of temporary suspension shall also contain notice of a hearing on indefinite suspension from participation in the primary housing loan program. The hearing shall be treated as a "class 3 proceedings" defined in s. 227.01 (3) (c) , Stats. The hearing shall be conducted pursuant to s. VA 4.11 (3) . The temporary suspension shall be effective until a final decision is reached following the hearing, pursuant to s. VA 4.11 (4) . A party aggrieved by a final decision may petition for rehearing pursuant to s. VA 4.11 (5) and (6) , and may appeal to the board of veterans affairs pursuant to s. VA 4.11 (7) .

(4)   Reinstatement. An authorized lender permanently suspended for making excessive accumulated omissions and material errors on loan application packages it has submitted after receiving the notice set forth in sub. (3) , may make application to the department for reinstatement to the department's list of authorized lenders at any time after 6 months from the effective date of the permanent suspension. The application shall include the lender's proposal for elimination of omissions and material errors on future loan application packages. The department, after investigation and evaluation of the lender's application, may reinstate the lender to the department's list of authorized lenders. If the department finds that an application for reinstatement is made without sufficient cause to justify reinstatement, it shall deny reinstatement.

History: Cr. Register, May, 2000, No. 533 , eff. 6-1-00.