BARRISTER'S BRIEFING: HUD’s Limited Denial of Participation’ Explained
Leon Cameron, Esq. | November 2018
A Limited Denial of Participation is an action taken by a HUD Field Office or the Deputy Assistant Secretary for Single Family or Multifamily Housing that excludes a party from further participation in a HUD program area. The scope of the LDP is limited to the geographic area of the office that sent the notice to the party. DASSF and DASMF LDPs are effective nationwide, unless otherwise noted.
An LDP generally expires in one year. A HUD program area is as broad as the programmatic jurisdiction of an Assistant Secretary. LDPs are issued to parties (individuals and companies) who fail to comply with HUD program standards. In most cases, the causes of an LDP action could be remedied by the party. HUD programs include, but are not limited to, Low-Income Rental Assistance under the U.S. Housing Act of 1937 (i.e. “Section 8”) and Supportive Housing for the Elderly under the Housing Act of 1959 (i.e. “Section 202”).
The LDP list is available electronically through the FHA Connection, AllRegs, Smart Regs and FISLACH mortgage industry information systems. In addition to the LDP list, the General Services Administration’s “Lists of Parties Excluded from Federal Procurement or Nonprocurement Programs” must be checked to determine if individuals or companies are suspended or debarred from further participation in HUD programs and throughout the Executive Branch of the federal government. The Lists of Parties is accessible through the Excluded Parties Listing System that is available online at https://bit.ly/2DmkCyF.
There is a mechanism by which housing providers can contest a Limited Denial of Participation. Within 30 days after receiving a notice of limited denial of participation, the provider may request a conference with the official who issued such notice. The conference shall be held within 15 days after the department’s receipt of the request for a conference, unless the provider waives this time limit. The official or designee who imposed the sanction shall preside. At the conference, the provider may appear with a representative and may present all relevant information and materials to the official or designee.
Within 20 days after the conference, or within 20 days after any agreed upon extension of time for submission of additional materials, the official or designee shall, in writing, advise the provider of the decision to terminate, modify or affirm the limited denial of participation. If all or a portion of the remaining period of exclusion is affirmed, the notice of affirmation shall advise the provider of the opportunity to contest the notice and request a hearing before a Departmental Hearing Officer.
The provider has 30 days after receipt of the notice of affirmation to request this hearing. If the official or designee does not issue a decision within the 20-day period, the provider may contest the sanction before a Departmental Hearing Officer. Again, the provider has 30 days from the expiration of the 20-day period to request this hearing. If the provider requests a hearing before the Departmental Hearing Officer, they must submit their request to the Debarment Docket Clerk, Department of Housing and Urban Development, 451 Seventh St., SW, B-133 Portals 200, Washington DC 20410-0500
Alternatively, the housing provider may skip the conference with the official and may request a hearing before a Departmental Hearing Officer. This must also be done within 30 days after receiving a notice of limited denial of participation. If the provider opts to have a hearing before a Departmental Hearing Officer, they must submit their request to the Debarment Docket Clerk, Department of Housing and Urban Development, 451 Seventh St.,, SW, B-133 Portals 200, Washington DC 20410-0500. The hearing before the Departmental Hearing Officer is more formal than the conference before the sanctioning official described above.
The hearing before the Departmental Hearing Officer will be conducted in accordance with the Code of Federal Regulations, 24 CFR part 26, subpart A. The Departmental Hearing Officer will issue findings of fact and make a recommended decision. The sanctioning official will then make a final decision as promptly as possible after the Departmental Hearing Officer recommended decision is issued. The sanctioning official may reject the recommended decision or any findings of fact, only after specifically determining the decision or any of the facts to be arbitrary or capricious or clearly erroneous.
Editor’s Note: The foregoing is for information purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.