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S. 2017 (107th): Indian Financing Amendments Act of 2002

The text of the bill below is as of Mar 14, 2002 (Introduced).


S 2017 IS

107th CONGRESS

2d Session

S. 2017

To amend the Indian Financing Act of 1974 to improve the effectiveness of the Indian loan guarantee and insurance program.

IN THE SENATE OF THE UNITED STATES

March 14, 2002

Mr. CAMPBELL (for himself and Mr. INOUYE) introduced the following bill; which was read twice and referred to the Committee on Indian Affairs


A BILL

To amend the Indian Financing Act of 1974 to improve the effectiveness of the Indian loan guarantee and insurance program.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Indian Financing Act Amendments of 2002’.

SEC. 2. FINDINGS AND PURPOSE.

    (a) FINDINGS- Congress finds that--

      (1) the Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.) was intended to provide Native American borrowers with access to commercial capital sources that, but for that Act, would not be available through loans guaranteed by the Secretary of the Interior;

      (2) although the Secretary of the Interior has made loan guarantees available, acceptance of loan guarantees by lenders to benefit Native American business borrowers has been limited;

      (3) 27 years after enactment of the Act, the promotion and development of Native American-owned business remains an essential foundation for growth of economic and social stability of Native Americans;

      (4) acceptance by lenders of the loan guarantees may be limited by liquidity and other capital market-driven concerns; and

      (5) it is in the best interest of the guaranteed loan program to--

        (A) encourage the orderly development and expansion of a secondary market for loans guaranteed by the Secretary; and

        (B) expand the number of lenders originating loans under that Act.

    (b) PURPOSES- The purposes of this Act are--

      (1) to stimulate the use by lenders of secondary market investors for loans guaranteed by the Secretary of the Interior;

      (2) to preserve the authority of the Secretary to administer the program and regulate lenders;

      (3) to clarify that a good faith investor in loans guaranteed by the Secretary will receive appropriate payments;

      (4) to provide for the appointment by the Secretary of a qualified fiscal transfer agent to administer a system for the orderly transfer of the loans;

      (5) to authorize the Secretary to--

        (A) promulgate regulations to encourage and expand a secondary market program for loans guaranteed by the Secretary; and

        (B) allow the pooling of the loans as the secondary market develops; and

      (6) to authorize the Secretary to establish a schedule for assessing lenders and investors for the necessary costs of the fiscal transfer agent and system.

SEC. 3. LOAN GUARANTEES.

    Section 205 of the Indian Financing Act of 1974 (25 U.S.C. 1485) is amended--

      (1) by inserting ‘(a) IN GENERAL- ’ before ‘Any loan’; and

      (2) by adding at the end the following:

    ‘(b) TRANSFER OF LOANS AND UNGUARANTEED PORTIONS OF LOANS-

      ‘(1) TRANSFER-

        ‘(A) IN GENERAL- The lender of a loan guaranteed under this title may transfer to any person--

          ‘(i) all of the rights and obligations of the lender under the loan, or in an unguaranteed portion of the loan; and

          ‘(ii) the security given for the loan or unguaranteed portion.

        ‘(B) REGULATIONS- A transfer under subparagraph (A) shall be consistent with such

regulations as the Secretary shall promulgate under subsection (g).

        ‘(C) NOTICE- A lender that completes a transfer under subparagraph (A) shall give notice of the transfer to the Secretary (or a designee of the Secretary).

      ‘(2) EFFECT OF TRANSFER- On any transfer under this subsection, the transferee shall--

        ‘(A) be considered to be the lender under this title;

        ‘(B) become the secured party of record; and

        ‘(C) be responsible for--

          ‘(i) performing the duties of the lender; and

          ‘(ii) servicing the loan or portion of the loan, as appropriate, in accordance with the terms of guarantee of the Secretary of the loan or portion of the loan.

    ‘(c) TRANSFER OF GUARANTEED PORTIONS OF LOANS-

      ‘(1) TRANSFER-

        ‘(A) IN GENERAL- The lender of a loan guaranteed under this title, and any subsequent transferee of all or part of the guaranteed portion of the loan, may transfer to any person--

          ‘(i) all or part of the guaranteed portion of the loan; and

          ‘(ii) the security given for the guaranteed portion transferred.

        ‘(B) REGULATIONS- A transfer under subparagraph (A) shall be consistent with such regulations as the Secretary shall promulgate under subsection (g).

        ‘(C) NOTICE- A lender that completes a transfer under subparagraph (A) shall give notice of the transfer to the Secretary (or a designee of the Secretary).

        ‘(D) ACKNOWLEDGEMENT- On receipt of notice of a transfer under subparagraph (C), the Secretary (or a designee of the Secretary) shall issue to the transferee the acknowledgement of the Secretary of--

          ‘(i) the transfer; and

          ‘(ii) the interest of the transferee in the guaranteed portion of a loan that was transferred.

      ‘(2) EFFECT- Notwithstanding any other provision of law, with respect to any transfer under this subsection, the lender shall--

        ‘(A) remain obligated under the guarantee agreement between the lender and the Secretary;

        ‘(B) continue to be responsible for servicing the loan in a manner consistent with the guarantee agreement; and

        ‘(C) remain the secured creditor of record.

    ‘(d) FULL FAITH AND CREDIT-

      ‘(1) IN GENERAL- The full faith and credit of the United States is pledged to the payment of all loan guarantees made under this title.

      ‘(2) VALIDITY-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the validity of a guarantee of a loan under this title shall be incontestable if the guarantee is held by a transferee of a guaranteed obligation whose interest in a guaranteed loan has been acknowledged by the Secretary (or a designee of the Secretary) under subsection (c)(1)(D).

        ‘(B) FRAUD OR MISREPRESENTATION- Subparagraph (A) shall not apply in a case in which the Secretary determines that a transferee of a loan or portion of a loan transferred under this section has actual knowledge of fraud or misrepresentation, or participates in or condones fraud or misrepresentation, in connection with the loan.

    ‘(e) DAMAGES- The Secretary may recover from a lender any damages suffered by the Secretary as a result of a material breach of an obligation of the lender under the guarantee of the loan.

    ‘(f) FEE- The Secretary may collect a fee for any loan or guaranteed portion of a loan transferred in accordance with subsection (b) or (c).

    ‘(g) REGULATIONS- Not later than 180 days after the date of enactment of this subsection, the Secretary shall promulgate such regulations as are necessary to facilitate, administer, and promote the transfer of loans and guaranteed portions of loans under this section.

    ‘(h) CENTRAL REGISTRATION- On promulgation of final regulations under subsection (g), the Secretary shall--

      ‘(1) provide for the central registration of all loans and portions of loans transferred under this section; and

      ‘(2) contract with a fiscal transfer agent--

        ‘(A) to act as a designee of the Secretary; and

        ‘(B) on behalf of the Secretary--

          ‘(i) to carry out the central registration and paying agent functions; and

          ‘(ii) to issue acknowledgements of the Secretary under subsection (c)(1)(D).

    ‘(i) POOLING-

      ‘(1) IN GENERAL- Nothing in this title prohibits the pooling of whole loans, or portions of loans, transferred under this section.

      ‘(2) REGULATIONS- The Secretary may promulgate regulations to effect orderly and efficient pooling procedures under this title.’.