market, for loans guaranteed or insured by the Sec-
retary of the Interior, and expand the number of lend-
ers 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 ad-
minister the program and regulate lenders;
(3) clarify that a good faith investor in loans in-
sured or guaranteed by the Secretary will receive ap-
propriate payments;
(4) provide for the appointment by the Secretary
of a qualified fiscal transfer agent which will estab-
lish 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 pro-
gram for loans guaranteed or insured by the Sec-
retary and to allow the pooling of such loans as the
secondary market develops; and
(6) authorize the Secretary to establish a sched-
ule for assessing lenders and investors for the nec-
essary 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 UNDER-
LYING 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 ‘‘guaran-
teed’’; and
(3) by adding at the end the following new sub-
sections:
‘‘(b)(1) The lender of a loan insured or guaranteed
under this title may transfer to any individual or legal en-
tity 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 Sec-
retary’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 regula-
tions 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 des-
ignee shall issue to the transferee the Secretary’s acknowl-
edgement 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 agree-
ment 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 in-
surance made under this title after the date of the enactment
of this subsection. The validity of a guarantee of, or insur-
ance 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 ac-
knowledged 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 Re-
ceipts 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 accord-
ance with subsection (g).
‘‘(g) Not later than 180 days after the date of the enact-
ment of this subsection, the Secretary shall develop such
procedures and shall adopt such regulations as are nec-
essary 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 Sec-
retary’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.’’.
Union Calendar No. 379
107TH CONGRESS
2D SESSION
H. R. 3407
[Report No. 107–630]
A BILL
To amend the Indian Financing Act of 1974 to im-
prove the effectiveness of the Indian loan guar-
antee and insurance program.
SEPTEMBER 4, 2002
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union,
and ordered to be printed