[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