N.Y. Comp. Codes R. & Regs. tit. 8 § 2004.5

Current through Register Vol. 46, No. 45, November 2, 2024

Section 2004.5 - Suspension

(a) Scope and duration. A suspension may affect all aspects of an institution's or lender's participation in programs under this Chapter or only a portion thereof. The duration of a suspension may be set to extend until the president has determined that the basis for the suspension has been removed and that a repetition of such violation appears unlikely; provided, however, that the period of suspension shall not exceed 60 days, unless the institution or lender and the president agree to an extension or unless limitation or termination procedings are initiated pursuant to section 2004.6 of this Part within this period of time, in which case the period of suspension may be extended until the completion of such proceedings.

(b) Procedures.

(1) Except as provided in subdivision (c) of this section, suspensions shall only be made pursuant to notice and opportunity to show cause as provided in this paragraph.

(2) Suspension proceedings shall be initiated by the president mailing to the institution or lender in question, a notice, by certified mail with return receipt requested:

(i) informing the institution of the corporation's intent to suspend the institution's or lender's eligibility and of the basis for such action;

(ii) specifying the proposed effective date of the suspension and the consequences of such action; and

(iii) informing the institution or lender of its rights, if exercised within a stated period of time, to submit written material and to request a meeting before the president or president's designee to show cause why such action should not be taken, prior to the time of suspension becomes effective. The notice shall also provide information about the nature of the meeting and such other information about the matter as the president may determine appropriate. The notice shall also invite voluntary efforts to correct the violation which led to the initiation of these proceedings.

(3) The proposed effective date for suspension provided for in paragraph (2) of this subdivision shall not be less than 15 days after the notice of intent has been sent. The period of time within which the institution or lender may submit written material or request a meeting to show cause shall not be less than 10 days after such notice has been sent. If such a meeting is requested, the president shall set a time and place for it, which time shall not be less than five days nor more than 30 days after the request is received by him. If a meeting is requested, but it cannot be held prior to the proposed effective date of suspension, the date shall be postponed until the completion of such meeting.

(4) The president shall consider any timely material presented to him in writing, any material presented to him during the course of the informal meeting provided for in paragraph (3) of this subdivision and any showing that the institution or lender has adequately corrected the violation which led to the initiation of suspension proceedings. If, after considering such material, the president concludes that the institution or lender has failed to show cause why its eligibility should not be suspended, he may suspend eligibility in whole or part and subject to such terms and conditions as he shall specify. Notice of such suspension shall be promptly transmitted to the institution or lender and shall become effective upon the date of transmittal. The institution of suspension proceedings or any suspension imposed shall not operate to waive the corporation's right to take action based upon the violations found to exist, including but not limited to the taking of limitation or termination proceedings or the imposition of such sanctions.

(c) Emergency action. The president may withhold the issuance of further commitments of guaranty to a lender or with respect to loans for all students attending an institution, upon three days' prior written notice if he determines that such immediate action is necessary in order to prevent an unreasonable risk of a substantial loss of funds either to the State or the students involved if further disbursements under this Part were permitted and that such risk is sufficiently serious to outweigh the importance of following the procedures set forth in subdivision (b) of this section. Such emergency action shall be initiated by sending the institution or lender a notice, by certified mail and return receipt requested, informing the institution or lender of the suspension and the grounds therefor. Such emergency action shall not exceed seven days in length unless suspension proceedings are initiated pursuant to subdivision (b) of this section or limitation or termination proceedings as initiated pursuant to section 2004.6 of this Part within such seven-day period, in which case the president may continue to withhold commitments of insurance until the conclusion of such proceedings. If limitation or termination proceedings are initiated, the president shall provide the institution or lender, if it so requests, an opportunity to show cause why the action should be rescinded pending the outcome of such proceedings.

N.Y. Comp. Codes R. & Regs. Tit. 8 § 2004.5