1. (1) A limitation or termination may be initiated whether or not suspension proceedings have been initiated under section 2004.5 of this Part. Limitation or termination procedures shall be initiated by the president mailing to the institution or lender in question a notice, by certified mail with return receipt requested:

   1. (i) informing the institution or lender of the corporation's intent to limit or terminate the institution's or lender's eligibility, the nature of any proposed limitation and the basis of such action;
   2. (ii) specifying the proposed effective date for the limitation or termination and the consequences of such action; and
   3. (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 hearing before the limitation or termination takes effect. The notice shall also provide information pertaining to this proceeding as the president may determine to be appropriate. The notice shall also invite voluntary efforts to correct the violation which led to the initiation of this action.
2. (2) Except as provided in subdivision (c) of this section, the proposed effective date of limitation or termination shall not be less than 21 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 hearing shall not be less than 15 days after such notice has been sent. If a hearing requested by the institution or lender cannot be held prior to the proposed effective date of the limitation or termination, the date shall be extended until the completion of such proceedings.
3. (3) If the institution or lender does not request a hearing, the president may, after considering any written material submitted on a timely basis by the institution or lender, dismiss the matter or notify the institution or lender that it has been limited or terminated.

4. (4) If the institution or lender requests a hearing within the time permitted, such hearing shall be conducted as promptly as possible by the presiding officer pursuant to the provisions of Part 2005 of this Chapter.

   (c) Effect of prior proceedings.

   If any proceedings have been previously initiated under this Subchapter against an institution or lender at the time limitation or termination proceedings are initiated, such proceedings need not duplicate the previous proceedings. Any matters resolved under the previous proceedings shall be considered final and any hearings undertaken in the subsequent limitation or termination proceedings shall be limited to new evidence or new issues; provided, however, that the presiding officer may, in his or her discretion, agree to reconsider matters previously resolved. Moreover, the time schedules set forth in paragraphs (b)(2), (4) and (5) of this section may be shortened to reflect the previous proceedings in such manner as the presiding officer may deem appropriate.

(a) Scope and duration.

A limitation may be imposed upon a finding that it is necessary to correct or remedy any violation found to have occurred, assure that it does not recur, or to penalize the institution for having committed such violation. Termination may be imposed upon a finding that the institution has knowingly committed fraud, has acted with gross or wanton negligence in the administration of the loan program, has violated a rule or regulation as a result of which a substantial loss of student, lender or government funds has occurred, or has a history of repeated violations of the same or different rules and regulations causing loss of student, lender or government funds. A limitation or termination may extend to all aspects of an institution's or lender's participation in programs under this Chapter or may be limited to portions thereof. The duration of a limitation may be set to extend for a definite period of time or until the president has determined that the basis for the limitation has been removed and that a repetition of such violation appears unlikely. An institution or lender which has been limited or terminated may subsequently seek reinstatement of its full eligibility to participate in programs under this Chapter pursuant to section 2004.7(b) of this Part.

(b) Procedures.