(b) Where the landlord has entered into an escrow agreement as provided in subdivision (a) of this section, the administrator shall issue orders adjusting all controlled rents to the appropriate maximum rent, effective as of the first day of the month following the execution of such agreement; provided, however, that in the event the administrator shall determine that the landlord has breached such agreement, the administrator may issue orders:

1. (1) decreasing the maximum rent pursuant to such agreement;
2. (2) containing a directive that rent collected by the landlord in excess of the rent thus decreased be refunded to the tenants; and
3. (3) containing such other determinations and directives as are necessary to effectuate the purposes of this section.

(c) Notwithstanding any provision of these regulations to the contrary, whenever, in the judgment of the administrator, action as provided in sections 2202.16 and 2202.17 of this Part is necessary or proper in order to effectuate the purposes of the Rent Law or of these regulations, the administrator may, in lieu of decreasing the maximum rents, issue orders adjusting all controlled rents and directing that rents be paid into an escrow account supervised by the administrator for the uses stated in subdivision (a) of this section, where:

1. (1) the landlord fails to take corrective action after notice by the administrator of proposed action to decrease the maximum rents pursuant to sections 2202.16 and 2202.17 of this Part;
2. (2) the administrator has notified all mortgagees who have filed with the administrator a declaration of interest in such property and in such proposed action; and
3. (3) the landlord has failed for three consecutive months to collect any controlled rents or to commence court proceedings for their collection or, if such proceedings have been commenced, the landlord has not diligently prosecuted them or such proceedings have not resulted in judgment in favor of such landlord.