I
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 re-
ferred 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 insur-
ance program.
Be it enacted by the Senate and House of Representa-
tives 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 guar-
antees available, their use by lenders to benefit Na-
tive 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 eco-
nomic 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 Inte-
rior, 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 Sec-
retary;
(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 Sec-
retary 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 regula-
tions 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 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.
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 sub-
sections:
‘‘(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 regu-
lations 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 indi-
vidual 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 trans-
fer and of the transferee’s interest in the guaranteed por-
tion of the loan.
‘‘(2) Notwithstanding any transfer permitted by this
subsection, the lender shall—
‘‘(A) remain obligated on its guarantee agree-
ment 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 incon-
testable 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 des-
ignee, 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 mate-
rial breach of the lender’s obligations under the Sec-
retary’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 pro-
motion of transfers of loans and guaranteed portions
thereof under this section.
‘‘(h) Upon adoption of final regulations, the Sec-
retary 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 des-
ignee and to carry out on behalf of the Secretary the cen-
tral registration and paying agent functions and issuance
of the Secretary’s acknowledgement required by sub-
section (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 or-
derly and efficient pooling procedures.’’.
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