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

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 or 
        insured by the Secretary of the Interior.
            (2) Although the Secretary has made loan guarantees and 
        insurance 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 insurance 
        and guarantees may be limited by liquidity and other capital 
        market-driven concerns.
            (5) It is in the best interest of the Secretary's insured 
        and guaranteed loan program to encourage the orderly 
        development and expansion of a secondary market, for loans 
        guaranteed or insured 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 or insured 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 insured or 
        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 or insured 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.

    (a) Limitation on Loan Amounts Without Prior Approval.--Section 204 
of the Indian Financing Act of 1974 (25 U.S.C. 1484) is amended by 
striking ``$100,000'' and inserting ``$250,000''.
    (b) Sale or Assignment of Loans and Underlying Security.--Section 
205 of such Act (25 U.S.C. 1485) is amended--
            (1) by inserting ``(a)'' before ``Any loan'';
            (2) by inserting ``insured or'' before ``guaranteed''; and
            (3) by adding at the end the following new subsections:
    ``(b)(1) The lender of a loan insured or 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 or 
uninsured 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 insured or guaranteed under this 
title, and any subsequent transferee of all or part of the insured or 
guaranteed portion of such loan, may transfer to any individual or 
legal entity all or part of the insured or 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 or insured portion of the loan.
    ``(2) Notwithstanding any transfer permitted by this subsection, 
the lender shall--
            ``(A) remain obligated on its guarantee agreement or 
        insurance agreement with the Secretary;
            ``(B) continue to be responsible for servicing the loan in 
        a manner consistent with such guarantee agreement or insurance 
        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 and loan insurance made under this 
title after the date of the enactment of this subsection. The validity 
of a guarantee of, or insurance of, a loan shall be incontestable in 
the hands of a transferee of the guaranteed or insurance obligations 
whose interest in a guaranteed loan or insurance 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) Notwithstanding section 3302 of title 31, United States Code 
(commonly known as the `Miscellaneous Receipts Act'), 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 or insurance of the loan.
    ``(f) The Secretary may collect a fee for any loan or guaranteed or 
insured 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 and 
insured portions thereof under this section.
    ``(h) Upon adoption of final regulations, the Secretary shall 
provide for a central registration of all guaranteed or insured 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.''.




                                                 

Summary: Indian Financing Act Reform Amendment - Amends the Indian Financing Act of 1974 to increase from $100,000 to $250,000 the amount of Bureau of Indian Affairs (BIA) insured loans a lender can offer to a borrower. Permits the transfer of insured or guaranteed loans made under such Act. Requires that the Secretary of the Interior be notified of such transfers. Continues the lender's obligation on the guarantee or insurance agreement, responsibility for servicing, and status as the secured creditor of record notwithstanding any transfer. Pledges the full faith and credit of the United States behind loan guarantees and loan insurance made under this Act. Authorizes the Secretary to recover damages from a lender for material breach of obligations under a guaranteed or insured loan.