[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2017 Reported in Senate (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,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Indian Financing Act 
Amendments of 2002''.</DELETED>

<DELETED>SEC. 2. FINDINGS AND PURPOSE.</DELETED>

<DELETED>    (a) Findings.--Congress finds that--</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (4) acceptance by lenders of the loan guarantees 
        may be limited by liquidity and other capital market-driven 
        concerns; and</DELETED>
        <DELETED>    (5) it is in the best interest of the guaranteed 
        loan program to--</DELETED>
                <DELETED>    (A) encourage the orderly development and 
                expansion of a secondary market for loans guaranteed by 
                the Secretary; and</DELETED>
                <DELETED>    (B) expand the number of lenders 
                originating loans under that Act.</DELETED>
<DELETED>    (b) Purposes.--The purposes of this Act are--</DELETED>
        <DELETED>    (1) to stimulate the use by lenders of secondary 
        market investors for loans guaranteed by the Secretary of the 
        Interior;</DELETED>
        <DELETED>    (2) to preserve the authority of the Secretary to 
        administer the program and regulate lenders;</DELETED>
        <DELETED>    (3) to clarify that a good faith investor in loans 
        guaranteed by the Secretary will receive appropriate 
        payments;</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (5) to authorize the Secretary to--</DELETED>
                <DELETED>    (A) promulgate regulations to encourage 
                and expand a secondary market program for loans 
                guaranteed by the Secretary; and</DELETED>
                <DELETED>    (B) allow the pooling of the loans as the 
                secondary market develops; and</DELETED>
        <DELETED>    (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.</DELETED>

<DELETED>SEC. 3. LOAN GUARANTEES.</DELETED>

<DELETED>    Section 205 of the Indian Financing Act of 1974 (25 U.S.C. 
1485) is amended--</DELETED>
        <DELETED>    (1) by inserting ``(a) In General.--'' before 
        ``Any loan''; and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
<DELETED>    ``(b) Transfer of Loans and Unguaranteed Portions of 
Loans.--</DELETED>
        <DELETED>    ``(1) Transfer.--</DELETED>
                <DELETED>    ``(A) In general.--The lender of a loan 
                guaranteed under this title may transfer to any 
                person--</DELETED>
                        <DELETED>    ``(i) all of the rights and 
                        obligations of the lender under the loan, or in 
                        an unguaranteed portion of the loan; 
                        and</DELETED>
                        <DELETED>    ``(ii) the security given for the 
                        loan or unguaranteed portion.</DELETED>
                <DELETED>    ``(B) Regulations.--A transfer under 
                subparagraph (A) shall be consistent with such 
                regulations as the Secretary shall promulgate under 
                subsection (g).</DELETED>
                <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(2) Effect of transfer.--On any transfer under 
        this subsection, the transferee shall--</DELETED>
                <DELETED>    ``(A) be considered to be the lender under 
                this title;</DELETED>
                <DELETED>    ``(B) become the secured party of record; 
                and</DELETED>
                <DELETED>    ``(C) be responsible for--</DELETED>
                        <DELETED>    ``(i) performing the duties of the 
                        lender; and</DELETED>
                        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(c) Transfer of Guaranteed Portions of Loans.--
</DELETED>
        <DELETED>    ``(1) Transfer.--</DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) all or part of the 
                        guaranteed portion of the loan; and</DELETED>
                        <DELETED>    ``(ii) the security given for the 
                        guaranteed portion transferred.</DELETED>
                <DELETED>    ``(B) Regulations.--A transfer under 
                subparagraph (A) shall be consistent with such 
                regulations as the Secretary shall promulgate under 
                subsection (g).</DELETED>
                <DELETED>    ``(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).</DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) the transfer; and</DELETED>
                        <DELETED>    ``(ii) the interest of the 
                        transferee in the guaranteed portion of a loan 
                        that was transferred.</DELETED>
        <DELETED>    ``(2) Effect.--Notwithstanding any other provision 
        of law, with respect to any transfer under this subsection, the 
        lender shall--</DELETED>
                <DELETED>    ``(A) remain obligated under the guarantee 
                agreement between the lender and the 
                Secretary;</DELETED>
                <DELETED>    ``(B) continue to be responsible for 
                servicing the loan in a manner consistent with the 
                guarantee agreement; and</DELETED>
                <DELETED>    ``(C) remain the secured creditor of 
                record.</DELETED>
<DELETED>    ``(d) Full Faith and Credit.--</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(2) Validity.--</DELETED>
                <DELETED>    ``(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).</DELETED>
                <DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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).</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(h) Central Registration.--On promulgation of final 
regulations under subsection (g), the Secretary shall--</DELETED>
        <DELETED>    ``(1) provide for the central registration of all 
        loans and portions of loans transferred under this section; 
        and</DELETED>
        <DELETED>    ``(2) contract with a fiscal transfer agent--
        </DELETED>
                <DELETED>    ``(A) to act as a designee of the 
                Secretary; and</DELETED>
                <DELETED>    ``(B) on behalf of the Secretary--
                </DELETED>
                        <DELETED>    ``(i) to carry out the central 
                        registration and paying agent functions; 
                        and</DELETED>
                        <DELETED>    ``(ii) to issue acknowledgements 
                        of the Secretary under subsection 
                        (c)(1)(D).</DELETED>
<DELETED>    ``(i) Pooling.--</DELETED>
        <DELETED>    ``(1) In general.--Nothing in this title prohibits 
        the pooling of whole loans, or portions of loans, transferred 
        under this section.</DELETED>
        <DELETED>    ``(2) Regulations.--The Secretary may promulgate 
        regulations to effect orderly and efficient pooling procedures 
        under this title.''.</DELETED>

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