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107th CONGRESS
  1st Session
                                H. R. 3407

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 5, 2001

  Mrs. Bono (for herself, Mr. Hayworth, Mr. Kildee, Mr. Camp, and Mr. 
   Kennedy of Rhode Island) introduced the following bill; which was 
                 referred to the Committee on Resources

_______________________________________________________________________

                                 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 Reform 
Amendment''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) The Indian Financing Act of 1974 (Public Law 93-262; 88 
        Stat. 77 et seq.) was intended to provide Native American 
        borrowers with access to commercial capital sources which 
        otherwise would not be available through loans guaranteed by 
        the Secretary of the Interior.
            (2) Although the Secretary has made loan guarantees 
        available, their use by lenders to benefit Native American 
        business borrowers has been limited.
            (3) 27 years after the date of the enactment of the Indian 
        Financing Act of 1974, the promotion and development of Native 
        American-owned business remains an essential foundation for 
        growth of economic and social stability of Native Americans.
            (4) Commercial lenders' use of the available loan 
        guarantees may be limited by liquidity and other capital 
        market-driven concerns.
            (5) It is in the best interest of the Secretary's 
        guaranteed loan program to encourage the orderly development 
        and expansion of a secondary market, for loans guaranteed by 
        the Secretary of the Interior, and expand the number of lenders 
        originating loans under the Indian Financing Act of 1974.
    (b) Purpose.--It is the purpose of this Act to reform and clarify 
the Indian Financing Act of 1974 in order to--
            (1) stimulate the use by lenders of secondary market 
        investors for loans guaranteed by the Secretary;
            (2) preserve the authority of the Secretary to administer 
        the program and regulate lenders;
            (3) clarify that a good faith investor in loans guaranteed 
        by the Secretary will receive appropriate payments;
            (4) provide for the appointment by the Secretary of a 
        qualified fiscal transfer agent which will establish and 
        administer a system for the orderly transfer of such loans;
            (5) authorize the Secretary to develop regulations to 
        encourage and expand a secondary market program for loans 
        guaranteed by the Secretary and to allow the pooling of such 
        loans as the secondary market develops; and
            (6) 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. AMENDMENT OF THE INDIAN FINANCING ACT.

    Section 205 of the Indian Financing Act of 1974 (25 U.S.C. 1485) is 
amended--
            (1) by inserting ``(a)'' before ``Any loan''; and
            (2) by adding at the end the following new subsections:
    ``(b)(1) The lender of a loan guaranteed under this title may 
transfer to any individual or legal entity all of the lender's rights 
and obligations in such loan or in the unguaranteed portion thereof, 
and the security given therefor. Such transfer shall be consistent with 
such regulations as the Secretary shall establish, and the lender shall 
give notice of such transfer to the Secretary or the Secretary's 
designee.
    ``(2) Upon any transfer permitted by this subsection, the 
transferee shall be deemed to be the lender under this title, shall 
become the secured party of record, and shall be responsible for 
performing the duties of the lender and for serving the loan in 
accordance with the terms of the Secretary's guarantee thereof.
    ``(c)(1) The lender of a loan guaranteed under this title, and any 
subsequent transferee of all or part of the guaranteed portion of such 
loan, may transfer to any individual or legal entity all or part of the 
guaranteed portion of such loan and the security therefor. Such 
transfer shall be consistent with such regulations as the Secretary 
shall establish, and the transferor shall give notice of such transfer 
to the Secretary or the Secretary's designee. The Secretary or the 
Secretary's designee shall issue to the transferee the Secretary's 
acknowledgement of the transfer and of the transferee's interest in the 
guaranteed portion of the loan.
    ``(2) Notwithstanding any transfer permitted by this subsection, 
the lender shall--
            ``(A) remain obligated on its guarantee agreement with the 
        Secretary;
            ``(B) continue to be responsible for servicing the loan in 
        a manner consistent with such guarantee agreement; and
            ``(C) remain the secured creditor of record.
    ``(d) The full faith and credit of the United States is pledged to 
the payment of all loan guarantees made under this title. The validity 
of a guarantee shall be incontestable in the hands of a transferee of 
the guaranteed obligations whose interest in a guaranteed loan has been 
acknowledged by the Secretary, or by the Secretary's designee, except 
if the transferee has actual knowledge of fraud or misrepresentation, 
or participates in or condones fraud or misrepresentation in connection 
with the loan.
    ``(e) The Secretary may recover from the lender any damages 
suffered by the Secretary as a result of a material breach of the 
lender's obligations under the Secretary's guarantee of the loan.
    ``(f) The Secretary may collect a fee for any loan or guaranteed 
portion thereof transferred in accordance with subsection (g).
    ``(g) Not later than 180 days after the date of the enactment of 
this subsection, the Secretary shall develop such procedures and shall 
adopt such regulations as are necessary for the facilitation, 
administration, and promotion of transfers of loans and guaranteed 
portions thereof under this section.
    ``(h) Upon adoption of final regulations, the Secretary shall 
provide for a central registration of all loans transferred pursuant to 
this section and shall contract with a fiscal transfer agent to act as 
the Secretary's designee and to carry out on behalf of the Secretary 
the central registration and paying agent functions and issuance of the 
Secretary's acknowledgement required by subsection (b).
    ``(i) Nothing in this title prohibits the pooling of whole loans or 
interests in loans transferred under this section. The Secretary may 
issue regulations to effect orderly and efficient pooling 
procedures.''.
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