[Congressional Record Volume 148, Number 117 (Tuesday, September 17, 2002)]
[Senate]
[Pages S8694-S8696]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                INDIAN FINANCING AMENDMENTS ACT OF 2002

  Mr. REID. Mr. President, I ask unanimous consent that the Senate 
proceed to the consideration of Calendar No. 558, S. 2017.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 2017) to amend the Indian Financing Act of 1974 
     to improve the effectiveness of the Indian loan guarantee and 
     insurance program.

  There being no objection, the Senate proceeded to consider the bill, 
which had been reported from the Committee on Indian Affairs with an 
amendment to strike all after the enacting clause and insert in lieu 
thereof the following:
  [Strike the part shown in black brackets and insert the part shown in 
italic.]
       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--

[[Page S8695]]

       [(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.''.]

     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--

[[Page S8696]]

       ``(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.''.
  Mr. REID. Mr. President, I ask unanimous consent that the Senate 
agree to the committee substitute amendment; that the bill, as amended, 
be read the third time and passed; that the motion to reconsider be 
laid upon the table; and that any statements relating to the bill be 
printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment in the nature of a substitute was agreed to.
  The bill (S. 2017), as amended, was read the third time and passed.

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