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

The text of the bill below is as of Aug 28, 2002 (Reported by Senate Committee).


S 2017 RS

Calendar No. 558

107th CONGRESS

2d Session

S. 2017

[Report No. 107-249]

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, Mr. INOUYE, Mr. DOMENICI, and Mr. JOHNSON) introduced the following bill; which was read twice and referred to the Committee on Indian Affairs

August 28, 2002

Reported under authority of the order of the Senate of July 29, 2002, by Mr. INOUYE, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]


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,

[Struck out->] SECTION 1. SHORT TITLE. [<-Struck out]

    [Struck out->] This Act may be cited as the ‘Indian Financing Act Amendments of 2002’. [<-Struck out]

[Struck out->] SEC. 2. FINDINGS AND PURPOSE. [<-Struck out]

    [Struck out->] (a) FINDINGS- Congress finds that-- [<-Struck out]

      [Struck out->] (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; [<-Struck out]

      [Struck out->] (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; [<-Struck out]

      [Struck out->] (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; [<-Struck out]

      [Struck out->] (4) acceptance by lenders of the loan guarantees may be limited by liquidity and other capital market-driven concerns; and [<-Struck out]

      [Struck out->] (5) it is in the best interest of the guaranteed loan program to-- [<-Struck out]

        [Struck out->] (A) encourage the orderly development and expansion of a secondary market for loans guaranteed by the Secretary; and [<-Struck out]

        [Struck out->] (B) expand the number of lenders originating loans under that Act. [<-Struck out]

    [Struck out->] (b) PURPOSES- The purposes of this Act are-- [<-Struck out]

      [Struck out->] (1) to stimulate the use by lenders of secondary market investors for loans guaranteed by the Secretary of the Interior; [<-Struck out]

      [Struck out->] (2) to preserve the authority of the Secretary to administer the program and regulate lenders; [<-Struck out]

      [Struck out->] (3) to clarify that a good faith investor in loans guaranteed by the Secretary will receive appropriate payments; [<-Struck out]

      [Struck out->] (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; [<-Struck out]

      [Struck out->] (5) to authorize the Secretary to-- [<-Struck out]

        [Struck out->] (A) promulgate regulations to encourage and expand a secondary market program for loans guaranteed by the Secretary; and [<-Struck out]

        [Struck out->] (B) allow the pooling of the loans as the secondary market develops; and [<-Struck out]

      [Struck out->] (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. [<-Struck out]

[Struck out->] SEC. 3. LOAN GUARANTEES. [<-Struck out]

    [Struck out->] Section 205 of the Indian Financing Act of 1974 (25 U.S.C. 1485) is amended-- [<-Struck out]

      [Struck out->] (1) by inserting ‘(a) IN GENERAL- ’ before ‘Any loan’; and [<-Struck out]

      [Struck out->] (2) by adding at the end the following: [<-Struck out]

    [Struck out->]

    ‘(b) TRANSFER OF LOANS AND UNGUARANTEED PORTIONS OF LOANS- [<-Struck out]

      [Struck out->]

      ‘(1) TRANSFER- [<-Struck out]

        [Struck out->]

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

          [Struck out->]

          ‘(i) all of the rights and obligations of the lender under the loan, or in an unguaranteed portion of the loan; and [<-Struck out]

          [Struck out->]

          ‘(ii) the security given for the loan or unguaranteed portion. [<-Struck out]

        [Struck out->]

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

        [Struck out->]

        ‘(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). [<-Struck out]

      [Struck out->]

      ‘(2) EFFECT OF TRANSFER- On any transfer under this subsection, the transferee shall-- [<-Struck out]

        [Struck out->]

        ‘(A) be considered to be the lender under this title; [<-Struck out]

        [Struck out->]

        ‘(B) become the secured party of record; and [<-Struck out]

        [Struck out->]

        ‘(C) be responsible for-- [<-Struck out]

          [Struck out->]

          ‘(i) performing the duties of the lender; and [<-Struck out]

          [Struck out->]

          ‘(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. [<-Struck out]

    [Struck out->]

    ‘(c) TRANSFER OF GUARANTEED PORTIONS OF LOANS- [<-Struck out]

      [Struck out->]

      ‘(1) TRANSFER- [<-Struck out]

        [Struck out->]

        ‘(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-- [<-Struck out]

          [Struck out->]

          ‘(i) all or part of the guaranteed portion of the loan; and [<-Struck out]

          [Struck out->]

          ‘(ii) the security given for the guaranteed portion transferred. [<-Struck out]

        [Struck out->]

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

        [Struck out->]

        ‘(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). [<-Struck out]

        [Struck out->]

        ‘(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-- [<-Struck out]

          [Struck out->]

          ‘(i) the transfer; and [<-Struck out]

          [Struck out->]

          ‘(ii) the interest of the transferee in the guaranteed portion of a loan that was transferred. [<-Struck out]

      [Struck out->]

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

        [Struck out->]

        ‘(A) remain obligated under the guarantee agreement between the lender and the Secretary; [<-Struck out]

        [Struck out->]

        ‘(B) continue to be responsible for servicing the loan in a manner consistent with the guarantee agreement; and [<-Struck out]

        [Struck out->]

        ‘(C) remain the secured creditor of record. [<-Struck out]

    [Struck out->]

    ‘(d) FULL FAITH AND CREDIT- [<-Struck out]

      [Struck out->]

      ‘(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. [<-Struck out]

      [Struck out->]

      ‘(2) VALIDITY- [<-Struck out]

        [Struck out->]

        ‘(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). [<-Struck out]

        [Struck out->]

        ‘(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. [<-Struck out]

    [Struck out->]

    ‘(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. [<-Struck out]

    [Struck out->]

    ‘(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). [<-Struck out]

    [Struck out->]

    ‘(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. [<-Struck out]

    [Struck out->]

    ‘(h) CENTRAL REGISTRATION- On promulgation of final regulations under subsection (g), the Secretary shall-- [<-Struck out]

      [Struck out->]

      ‘(1) provide for the central registration of all loans and portions of loans transferred under this section; and [<-Struck out]

      [Struck out->]

      ‘(2) contract with a fiscal transfer agent-- [<-Struck out]

        [Struck out->]

        ‘(A) to act as a designee of the Secretary; and [<-Struck out]

        [Struck out->]

        ‘(B) on behalf of the Secretary-- [<-Struck out]

          [Struck out->]

          ‘(i) to carry out the central registration and paying agent functions; and [<-Struck out]

          [Struck out->]

          ‘(ii) to issue acknowledgements of the Secretary under subsection (c)(1)(D). [<-Struck out]

    [Struck out->]

    ‘(i) POOLING- [<-Struck out]

      [Struck out->]

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

      [Struck out->]

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Indian Financing Amendments Act 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 sources of capital that otherwise would not be available through the guarantee or insurance of loans by the Secretary of the Interior;

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

      (3) 27 years after the date of enactment of the Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.), the promotion and development of Native American-owned business remains an essential foundation for growth of economic and social stability of Native Americans;

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

      (5) it is in the best interest of the insured and guaranteed loan program of the Department of the Interior--

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

        (B) to expand the number of lenders originating loans under the Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.).

    (b) PURPOSE- The purpose of this Act is to reform and clarify the Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.) in order to--

      (1) stimulate the use by lenders of secondary market investors for loans guaranteed or insured under a program administered by the Secretary of the Interior;

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

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

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

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

      (B) allow the pooling of those loans as the secondary market develops.

SEC. 3. AMENDMENTS TO INDIAN FINANCING ACT.

    (a) LIMITATION ON LOAN AMOUNTS WITHOUT PRIOR APPROVAL- Section 204 of the Indian Financing Act of 1974 (25 U.S.C. 1484) is amended in the last sentence by striking ‘$100,000’ and inserting ‘$250,000’.

    (b) SALE OR ASSIGNMENT OF LOANS AND UNDERLYING SECURITY- Section 205 of the Indian Financing Act of 1974 (25 U.S.C. 1485) is amended--

      (1) by striking ‘Any loan guaranteed’ and inserting the following:

    ‘(a) IN GENERAL- Any loan guaranteed or insured’; and

      (2) by adding at the end the following:

    ‘(b) INITIAL TRANSFERS-

      ‘(1) IN GENERAL- The lender of a loan guaranteed or insured under this title may transfer to any individual or legal entity--

        ‘(A) all rights and obligations of the lender in the loan or in the unguaranteed or uninsured portion of the loan; and

        ‘(B) any security given for the loan.

      ‘(2) ADDITIONAL REQUIREMENTS- With respect to a transfer described in paragraph (1)--

        ‘(A) the transfer shall be consistent with such regulations as the Secretary shall promulgate under subsection (i); and

        ‘(B) the lender shall give notice of the transfer to the Secretary.

      ‘(3) RESPONSIBILITIES OF TRANSFEREE- On any transfer under paragraph (1), the transferee shall--

        ‘(A) be deemed to be the lender for the purpose of 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 in accordance with the terms of the guarantee by the Secretary of the loan.

    ‘(c) SECONDARY TRANSFERS-

      ‘(1) IN GENERAL- Any transferee under subsection (b) of a loan guaranteed or insured under this title may transfer to any individual or legal entity--

        ‘(A) all rights and obligations of the transferee in the loan or in the unguaranteed or uninsured portion of the loan; and

        ‘(B) any security given for the loan.

      ‘(2) ADDITIONAL REQUIREMENTS- With respect to a transfer described in paragraph (1)--

        ‘(A) the transfer shall be consistent with such regulations as the Secretary shall promulgate under subsection (i); and

        ‘(B) the transferor shall give notice of the transfer to the Secretary.

      ‘(3) ACKNOWLEDGMENT BY SECRETARY- On receipt of a notice of a transfer under paragraph

(2)(B), the Secretary shall issue to the transferee an acknowledgement by the Secretary of--

        ‘(A) the transfer; and

        ‘(B) the interest of the transferee in the guaranteed or insured portion of the loan.

      ‘(4) RESPONSIBILITIES OF LENDER- Notwithstanding any transfer permitted by this subsection, the lender shall--

        ‘(A) remain obligated on the guarantee agreement or insurance agreement between the lender and the Secretary;

        ‘(B) continue to be responsible for servicing the loan in a manner consistent with that guarantee agreement or insurance 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 and loan insurance made under this title after the date of enactment of this subsection.

      ‘(2) VALIDITY-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the validity of a guarantee or insurance of a loan under this title shall be incontestable if the obligations of the guarantee or insurance held by a transferee have been acknowledged under subsection (c)(3).

        ‘(B) EXCEPTION FOR FRAUD OR MISREPRESENTATION- Subparagraph (A) shall not apply in a case in which a transferee has actual knowledge of fraud or misrepresentation, or participates in or condones fraud or misrepresentation, in connection with a loan.

    ‘(e) DAMAGES- Notwithstanding section 3302 of title 31, United States Code, the Secretary may recover from a lender of a loan under this title any damages suffered by the Secretary as a result of a material breach of the obligations of the lender with respect to a guarantee or insurance by the Secretary of the loan.

    ‘(f) FEES- The Secretary may collect a fee for any loan or guaranteed or insured portion of a loan that is transferred in accordance with this section.

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

      ‘(1) provide for a central registration of all guaranteed or insured loans transferred under this section; and

      ‘(2) enter into 1 or more contracts with a fiscal transfer agent--

        ‘(A) to act as the designee of the Secretary under this section; and

        ‘(B) to carry out on behalf of the Secretary the central registration and fiscal transfer agent functions, and issuance of acknowledgements, under this section.

    ‘(h) POOLING OF LOANS-

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

      ‘(2) REGULATIONS- In promulgating regulations under subsection (i), the Secretary may include such regulations to effect orderly and efficient pooling procedures as the Secretary determines to be necessary.

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

Calendar No. 558

107th CONGRESS

2d Session

S. 2017

[Report No. 107-249]

A BILL

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


August 28, 2002

Reported with an amendment