103 STAT. 2004 PUBLIC LAW 101-235—DEC. 15, 1989 Secretary imposes other adniinJstrative sanctions. The Secretary may not impose penalties under ^his section for violations a mate- rial cause of which are the faihire of the Department, an agent of the Department, or a public housing agency to comply with existing agreements. "(b) PENALTY FOR VIOLATION OF AGREEMENT AS CONDITION OF TRANSFER OF PHYSICAL ASSETS, FLEXIBLE SUBSIDY LOAN, CAPITAL IMPROVEMENT LOAN, MODIFICATION OF MORTGAGE TERMS, OR WORK- OUT AGREEMENT. — " (1) AUTHORITY. —Whenever a mortgagor of property that includes 5 or more living units and that has a mortgage insured, co-insured, or held pursuant to this Act, who has agreed in writing, as a condition of a transfer of physical assets, a flexible subsidy loan, a capital improvement loan, a modification of the inOrtgage terms, or a workout agreement, to use nonproject income to make cash contributions for payments due under the note and mortgage, for payments to the reserve for replace- ments, to restore the project to good physical condition, or to pay other project liabilities, knowingly and materially fails to comply with any of these commitments, the Secretary may impose a dvil money penalty on that mortgagor in accordance with the provisions of this section. "(2) AMOUNT OF PENALTY. —The amount of the penalty, as determined by the Secretary, for a violation of this subscNCtion may not exceed the amount of the loss the Secretary would experience at a foreclosure sale, or a sale after foreclosure, of the property involved. "(c) VIOLATIONS OF REGULATORY AGREEMENT FOR WHICH PENALTY MAY BE IMPOSED.— Real property. "(1) VIOLATIONS.—The Secretary may also impose a civil money penalty under this section on any mortgagor of property that includes 5 or more living units and that has a mortgage insured, co-insured, or held pursuant to this Act for any know- ing and material violation of the r^ulatory agreement executed by the morteagor, as follows: "(A) Conveyance, transfer, or encumbrance of any of the mortgaged property, or permitting the conveyance, trans- fer, or encumbrance of such property, without the prior written approval of the Secret^. "(B) Assignment, transfer, disposition, or encumbrance of any personal property of the project, including rents, or paying out any funds, except for reasonable operating ex- penses and necessary repairs, witho|ut the prior written approval of the Secretary. (C) Conveyance, assignment, or transfer of any bene- ficial interest in any thist holdhig title to the property, or the interest of any general partner in a partnership owning the property, or any right to manage or receiy(| the rents and profits from the mortgaged property, with^ii the prior written approval (^ the Secretary. "(D) Remodeling, adding to, reconstructing, or demolish- ing any part of the mortgaged property or subtracting; frbm any reied or personal property of the project, without the prior written approval of uie Secretary. "(E) Requixing, as a condition of the occupancy or leasing of any unit in the project, any consideration or deposit other than the prepayment <^ the first month's rent, plus a
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