SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Certified Development
Company Program Improvements Act of 1999’’.
SEC. 2. WOMEN-OWNED BUSINESSES.
Section 501(d)(3)(C) of the Small Business Invest-
ment Act (15 U.S.C. 695(d)(3)(C)) is amended by insert-
ing before the comma ‘‘or women-owned business develop-
ment’’.
SEC. 3. MAXIMUM DEBENTURE SIZE.
Section 502(2) of the Small Business Investment Act
of 1958 (15 U.S.C. 696(2)) is amended to read as follows:
‘‘(2) Loans made by the Administration under
this section shall be limited to $1,000,000 for each
such identifiable small business concern, except
loans meeting the criteria specified in section
501(d)(3), which shall be limited to $1,300,000 for
each such identifiable small business concern.’’.
SEC. 4. FEES.
Section 503(f) of the Small Business Investment Act
of 1958 (15 U.S.C. 697(f)) is amended to read as follows:
‘‘(f) EFFECTIVE DATE.—The fees authorized by sub-
sections (b) and (d) shall apply to financings approved by
the Administration on or after October 1, 1996, but shall
not apply to financings approved by the Administration
on or after October 1, 2003.’’.
SEC. 5. PREMIER CERTIFIED LENDERS PROGRAM.
Section 217(b) of the Small Business Reauthoriza-
tion and Amendments Act of 1994 (relating to section 508
of the Small Business Investment Act) is repealed.
SEC. 6. SALE OF CERTAIN DEFAULTED LOANS.
Section 508 of the Small Business Investment Act
of 1958 (15 U.S.C. 697e) is amended—
(1) in subsection (a), by striking ‘‘On a pilot
program basis, the’’ and inserting ‘‘The’’;
(2) by redesignating subsections (d) though (i)
as subsections (e) though (j), respectively;
(3) in subsection (f) (as redesignated by para-
graph (2)), by striking ‘‘subsection (f)’’ and insert-
ing ‘‘subsection (g)’’;
(4) in subsection (h) (as redesignated by para-
graph (2)), by striking ‘‘subsection (f)’’ and insert-
ing ‘‘subsection (g)’’; and
(5) by inserting after subsection (c) the fol-
lowing:
‘‘(d) SALE OF CERTAIN DEFAULTED LOANS.—
‘‘(1) NOTICE.—If, upon default in repayment,
the Administration acquires a loan guaranteed under
this section and identifies such loan for inclusion in
a bulk asset sale of defaulted or repurchased loans
or other financings, it shall give prior notice thereof
to any certified development company which has a
contingent liability under this section. The notice
shall be given to the company as soon as possible
after the financing is identified, but not less than 90
days before the date the Administration first makes
any records on such financing available for examina-
tion by prospective purchasers prior to its offering in
a package of loans for bulk sale.
‘‘(2) LIMITATIONS.—The Administration shall
not offer any loan described in paragraph (1) as
part of a bulk sale unless it—
‘‘(A) provides prospective purchasers with
the opportunity to examine the Administration’s
records with respect to such loan; and
‘‘(B) provides the notice required by para-
graph (1).’’.
SEC. 7. LOAN LIQUIDATION.
(a) LIQUIDATION AND FORECLOSURE.—Title V of
the Small Business Investment Act of 1958 (15 U.S.C.
695 et seq.) is amended by adding at the end the fol-
lowing:
‘‘SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS.
‘‘(a) DELEGATION OF AUTHORITY.—In accordance
with this section, the Administration shall delegate to any
qualified State or local development company (as defined
in section 503(e)) that meets the eligibility requirements
of subsection (b)(1) the authority to foreclose and liq-
uidate, or to otherwise treat in accordance with this sec-
tion, defaulted loans in its portfolio that are funded with
the proceeds of debentures guaranteed by the Administra-
tion under section 503.
‘‘(b) ELIGIBILITY FOR DELEGATION.—
‘‘(1) REQUIREMENTS.—A qualified State or
local development company shall be eligible for a del-
egation of authority under subsection (a) if—
‘‘(A) the company—
‘‘(i) has participated in the loan liq-
uidation pilot program established by the
Small Business Programs Improvement
Act of 1996 (15 U.S.C. 695 note), as in
effect on the day before promulgation of
final regulations by the Administration im-
plementing this section;
‘‘(ii) is participating in the Premier
Certified Lenders Program under section
508; or
‘‘(iii) during the 3 fiscal years imme-
diately prior to seeking such a delegation,
has made an average of not less than 10
loans per year that are funded with the
proceeds of debentures guaranteed under
section 503; and
‘‘(B) the company—
‘‘(i) has one or more employees—
‘‘(I) with not less than 2 years of
substantive, decision-making experi-
ence in administering the liquidation
and workout of problem loans secured
in a manner substantially similar to
loans funded with the proceeds of de-
bentures guaranteed under section
503; and
‘‘(II) who have completed a train-
ing program on loan liquidation devel-
oped by the Administration in con-
junction with qualified State and local
development companies that meet the
requirements of this paragraph; or
‘‘(ii) submits to the Administration
documentation demonstrating that the
company has contracted with a qualified
third-party to perform any liquidation ac-
tivities and secures the approval of the
contract by the Administration with re-
spect to the qualifications of the contractor
and the terms and conditions of liquidation
activities.
‘‘(2) CONFIRMATION.—On request the Adminis-
tration shall examine the qualifications of any com-
pany described in subsection (a) to determine if such
company is eligible for the delegation of authority
under this section. If the Administration determines
that a company is not eligible, the Administration
shall provide the company with the reasons for such
ineligibility.
‘‘(c) SCOPE OF DELEGATED AUTHORITY.—
‘‘(1) IN
GENERAL.—Each qualified State or
local development company to which the Administra-
tion delegates authority under section (a) may with
respect to any loan described in subsection (a)—
‘‘(A) perform all liquidation and fore-
closure functions, including the purchase in ac-
cordance with this subsection of any other in-
debtedness secured by the property securing the
loan, in a reasonable and sound manner accord-
ing to commercially accepted practices, pursu-
ant to a liquidation plan approved in advance
by the Administration under paragraph (2)(A);
‘‘(B) litigate any matter relating to the
performance of the functions described in sub-
paragraph (A), except that the Administration
may—
‘‘(i) defend or bring any claim if—
‘‘(I) the outcome of the litigation
may adversely affect the Administra-
tion’s management of the loan pro-
gram established under section 502;
or
‘‘(II) the Administration is enti-
tled to legal remedies not available to
a qualified State or local development
company and such remedies will ben-
efit either the Administration or the
qualified State or local development
company; or
‘‘(ii) oversee the conduct of any such
litigation; and
‘‘(C) take other appropriate actions to
mitigate loan losses in lieu of total liquidation
or foreclosures, including the restructuring of a
loan in accordance with prudent loan servicing
practices and pursuant to a workout plan ap-
proved in advance by the Administration under
paragraph (2)(C).
‘‘(2) ADMINISTRATION APPROVAL.—
‘‘(A) LIQUIDATION PLAN.—
‘‘(i) IN
GENERAL.—Before carrying
out functions described in paragraph
(1)(A), a qualified State or local develop-
ment company shall submit to the Admin-
istration a proposed liquidation plan.
‘‘(ii) ADMINISTRATION
ACTION
ON
PLAN.—
‘‘(I) TIMING.—Not later than 15
business days after a liquidation plan
is received by the Administration
under clause (i), the Administration
shall approve or reject the plan.
‘‘(II) NOTICE OF NO DECISION.—
With respect to any plan that cannot
be approved or denied within the 15-
day period required by subclause (I),
the Administration shall within such
period provide in accordance with sub-
paragraph (E) notice to the company
that submitted the plan.
‘‘(iii) ROUTINE ACTIONS.—In carrying
out functions described in paragraph
(1)(A), a qualified State or local develop-
ment company may undertake routine ac-
tions not addressed in a liquidation plan
without obtaining additional approval from
the Administration.
‘‘(B) PURCHASE OF INDEBTEDNESS.—
‘‘(i) IN
GENERAL.—In carrying out
functions described in paragraph (1)(A), a
qualified State or local development com-
pany shall submit to the Administration a
request for written approval before com-
mitting the Administration to the purchase
of any other indebtedness secured by the
property securing a defaulted loan.
‘‘(ii) ADMINISTRATION ACTION ON RE-
QUEST.—
‘‘(I) TIMING.—Not later than 15
business days after receiving a request
under clause (i), the Administration
shall approve or deny the request.
‘‘(II) NOTICE OF NO DECISION.—
With respect to any request that can-
not be approved or denied within the
15-day period required by subclause
(I), the Administration shall within
such period provide in accordance
with subparagraph (E) notice to the
company that submitted the request.
‘‘(C) WORKOUT PLAN.—
‘‘(i) IN
GENERAL.—In carrying out
functions described in paragraph (1)(C), a
qualified State or local development com-
pany shall submit to the Administration a
proposed workout plan.
‘‘(ii) ADMINISTRATION
ACTION
ON
PLAN.—
‘‘(I) TIMING.—Not later than 15
business days after a workout plan is
received by the Administration under
clause (i), the Administration shall
approve or reject the plan.
‘‘(II) NOTICE OF NO DECISION.—
With respect to any workout plan that
cannot be approved or denied within
the 15-day period required by sub-
clause (I), the Administration shall
within such period provide in accord-
ance with subparagraph (E) notice to
the company that submitted the plan.
‘‘(D) COMPROMISE OF INDEBTEDNESS.—
In carrying out functions described in para-
graph (1)(A), a qualified State or local develop-
ment company may—
‘‘(i) consider an offer made by an obli-
gor to compromise the debt for less than
the full amount owing; and
‘‘(ii) pursuant to such an offer, re-
lease any obligor or other party contin-
gently liable, if the company secures the
written approval of the Administration.
‘‘(E) CONTENTS OF NOTICE OF NO DECI-
SION.—Any notice provided by the Administra-
tion 
under 
subparagraphs 
(A)(ii)(II),
(B)(ii)(II), or (C)(ii)(II)—
‘‘(i) shall be in writing;
‘‘(ii) shall state the specific reason for
the Administration’s inability to act on a
plan or request;
‘‘(iii) shall include an estimate of the
additional time required by the Adminis-
tration to act on the plan or request; and
‘‘(iv) if the Administration cannot act
because insufficient information or docu-
mentation was provided by the company
submitting the plan or request, shall speci-
fy the nature of such additional informa-
tion or documentation.
‘‘(3) CONFLICT OF INTEREST.—In carrying out
functions described in paragraph (1), a qualified
State or local development company shall take no ac-
tion that would result in an actual or apparent con-
flict of interest between the company (or any em-
ployee of the company) and any third party lender,
associate of a third party lender, or any other person
participating in a liquidation, foreclosure, or loss
mitigation action.
‘‘(d) SUSPENSION
OR REVOCATION
OF AUTHOR-
ITY.—The Administration may revoke or suspend a dele-
gation of authority under this section to any qualified
State or local development company, if the Administration
determines that the company—
‘‘(1) does not meet the requirements of sub-
section (b)(1);
‘‘(2) has violated any applicable rule or regula-
tion of the Administration or any other applicable
law; or
‘‘(3) fails to comply with any reporting require-
ment that may be established by the Administration
relating to carrying out of functions described in
paragraph (1).