the Administration shall give prior notice thereof
to any certified development company that has a
contingent liability under this section.
‘‘(B) TIMING.—The notice required by sub-
paragraph (A) shall be given to the certified de-
velopment company as soon as possible after the
financing is identified, but not later than 90
days before the date on which the Administration
first makes any record on such financing avail-
able for examination by prospective purchasers
prior to its offering in a package of loans for
bulk sale.
‘‘(2) LIMITATIONS.—The Administration may
not offer any loan described in paragraph (1)(A) as
part of a bulk sale, unless the Administration—
‘‘(A) provides prospective purchasers with
the opportunity to examine the records of the Ad-
ministration 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 following:
‘‘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) of this section the authority to foreclose
and liquidate, or to otherwise treat in accordance with this
section, 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 delegation
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 the date of issuance of final
regulations by the Administration imple-
menting 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 fewer than 10
loans per year that are funded with the pro-
ceeds of debentures guaranteed under section
503; and
‘‘(B) the company—
‘‘(i) has 1 or more employees—
‘‘(I) with not less than 2 years of
substantive, decision-making experience
in administering the liquidation and
workout of problem loans secured in a
manner substantially similar to loans
funded with the proceeds of debentures
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 com-
pany has contracted with a qualified third-
party to perform any liquidation activities
and secures the approval of the contract by
the Administration with respect to the
qualifications of the contractor and the
terms and conditions of liquidation activi-
ties.
‘‘(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 Administration
delegates authority under subsection (a) may, with re-
spect to any loan described in subsection (a)—
‘‘(A) perform all liquidation and foreclosure
functions, including the purchase in accordance
with this subsection of any other indebtedness se-
cured by the property securing the loan, in a
reasonable and sound manner, according to com-
mercially accepted practices, pursuant to a liq-
uidation plan approved in advance by the Ad-
ministration under paragraph (2)(A);
‘‘(B) litigate any matter relating to the per-
formance of the functions described in subpara-
graph (A), except that the Administration
may—
‘‘(i) defend or bring any claim if—
‘‘(I) the outcome of the litigation
may adversely affect management by
the Administration 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 miti-
gate loan losses in lieu of total liquidation or
foreclosure, including the restructuring of a loan
in accordance with prudent loan servicing prac-
tices and pursuant to a workout plan approved
in advance by the Administration under para-
graph (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 development com-
pany shall submit to the Administration 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 liquidation plan
that cannot be approved or denied
within the 15-day period required by
subclause (I), the Administration shall,
during such period, provide notice in
accordance with subparagraph (E) 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 any routine
action 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 commit-
ting the Administration to the purchase of
any other indebtedness secured by the prop-
erty 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 cannot
be approved or denied within the 15-
day period required by subclause (I),
the Administration shall, during such
period, provide notice in accordance
with subparagraph (E) 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 ap-
prove 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,
during such period, provide notice in
accordance with subparagraph (E) to
the company that submitted the plan.
‘‘(D) COMPROMISE OF INDEBTEDNESS.—In
carrying out functions described in paragraph
(1)(A), a qualified State or local development
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, release
any obligor or other party contingently lia-
ble, if the company secures the written ap-
proval of the Administration.
‘‘(E) CONTENTS OF NOTICE OF NO DECI-
SION.—Any notice provided by the Administra-
tion under subparagraph (A)(ii)(II), (B)(ii)(II),
or (C)(ii)(II)—
‘‘(i) shall be in writing;
‘‘(ii) shall state the specific reason for
the inability of the Administration to act
on the subject plan or request;
‘‘(iii) shall include an estimate of the
additional time required by the Administra-
tion 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 specify
the nature of such additional information
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
(or any associate of a third party lender) or any
other person participating in a liquidation, fore-
closure, or loss mitigation action.
‘‘(d) SUSPENSION OR REVOCATION OF AUTHORITY.—
The Administration may revoke or suspend a delegation 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 subsection
(b)(1);
‘‘(2) has violated any applicable rule or regula-
tion of the Administration or any other applicable
provision of law; or
‘‘(3) has failed to comply with any reporting re-
quirement that may be established by the Administra-
tion relating to carrying out functions described in
subsection (c)(1).
‘‘(e) REPORT.—
‘‘(1) IN GENERAL.—Based on information pro-
vided by qualified State and local development com-
panies and the Administration, the Administration
shall annually submit to the Committees on Small
Business of the House of Representatives and the Sen-
ate a report on the results of delegation of authority
under this section.
‘‘(2) CONTENTS.—Each report submitted under
paragraph (1) shall include—
‘‘(A) with respect to each loan foreclosed or
liquidated by a qualified State or local develop-
ment company under this section, or for which
losses were otherwise mitigated by the company
pursuant to a workout plan under this section—
‘‘(i) the total cost of the project fi-
nanced with the loan;
‘‘(ii) the total original dollar amount
guaranteed by the Administration;