§ 1485. — Sale or assignment of loans and underlying security.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 25USC1485]
TITLE 25--INDIANS
CHAPTER 17--FINANCING ECONOMIC DEVELOPMENT OF INDIANS AND INDIAN
ORGANIZATIONS
SUBCHAPTER II--LOAN GUARANTY AND INSURANCE
Sec. 1485. Sale or assignment of loans and underlying security
(a) In general
Any loan guaranteed or insured under this subchapter, including the
security given for such loan, may be sold or assigned by the lender to
any person.
(b) Initial transfers
(1) In general
The lender of a loan guaranteed or insured under this subchapter
may transfer to any individual or legal entity--
(A) all rights and obligations of the lender in the loan or
in the unguaranteed or uninsured portion of the loan; and
(B) any security given for the loan.
(2) Additional requirements
With respect to a transfer described in paragraph (1)--
(A) the transfer shall be consistent with such regulations
as the Secretary shall promulgate under subsection (i) of this
section; and
(B) the lender shall give notice of the transfer to the
Secretary.
(3) Responsibilities of transferee
On any transfer under paragraph (1), the transferee shall--
(A) be deemed to be the lender for the purpose of this
subchapter;
(B) become the secured party of record; and
(C) be responsible for--
(i) performing the duties of the lender; and
(ii) servicing the loan in accordance with the terms of
the guarantee by the Secretary of the loan.
(c) Secondary transfers
(1) In general
Any transferee under subsection (b) of this section of a loan
guaranteed or insured under this subchapter may transfer to any
individual or legal entity--
(A) all rights and obligations of the transferee in the loan
or in the unguaranteed or uninsured portion of the loan; and
(B) any security given for the loan.
(2) Additional requirements
With respect to a transfer described in paragraph (1)--
(A) the transfer shall be consistent with such regulations
as the Secretary shall promulgate under subsection (i) of this
section; and
(B) the transferor shall give notice of the transfer to the
Secretary.
(3) Acknowledgment by Secretary
On receipt of a notice of a transfer under paragraph (2)(B), the
Secretary shall issue to the transferee an acknowledgment by the
Secretary of--
(A) the transfer; and
(B) the interest of the transferee in the guaranteed or
insured portion of the loan.
(4) Responsibilities of lender
Notwithstanding any transfer permitted by this subsection, the
lender shall--
(A) remain obligated on the guarantee agreement or insurance
agreement between the lender and the Secretary;
(B) continue to be responsible for servicing the loan in a
manner consistent with that guarantee agreement or insurance
agreement; and
(C) remain the secured creditor of record.
(d) Full faith and credit
(1) In general
The full faith and credit of the United States is pledged to the
payment of all loan guarantees and loan insurance made under this
subchapter after December 13, 2002.
(2) Validity
(A) In general
Except as provided in subparagraph (B), the validity of a
guarantee or insurance of a loan under this subchapter shall be
incontestable if the obligations of the guarantee or insurance
held by a transferee have been acknowledged under subsection
(c)(3) of this section.
(B) Exception for fraud or misrepresentation
Subparagraph (A) shall not apply in a case in which a
transferee has actual knowledge of fraud or misrepresentation,
or participates in or condones fraud or misrepresentation, in
connection with a loan.
(e) Damages
Notwithstanding section 3302 of title 31, the Secretary may recover
from a lender of a loan under this subchapter any damages suffered by
the Secretary as a result of a material breach of the obligations of the
lender with respect to a guarantee or insurance by the Secretary of the
loan.
(f) Fees
The Secretary may collect a fee for any loan or guaranteed or
insured portion of a loan that is transferred in accordance with this
section.
(g) Central registration of loans
On promulgation of final regulations under subsection (i) of this
section, the Secretary shall--
(1) provide for a central registration of all guaranteed or
insured loans transferred under this section; and
(2) enter into 1 or more contracts with a fiscal transfer
agent--
(A) to act as the designee of the Secretary under this
section; and
(B) to carry out on behalf of the Secretary the central
registration and fiscal transfer agent functions, and issuance
of acknowledgments, under this section.
(h) Pooling of loans
(1) In general
Nothing in this subchapter prohibits the pooling of whole loans
or interests in loans transferred under this section.
(2) Regulations
In promulgating regulations under subsection (i) of this
section, the Secretary may include such regulations to effect
orderly and efficient pooling procedures as the Secretary determines
to be necessary.
(i) Regulations
Not later than 180 days after December 13, 2002, the Secretary shall
develop such procedures and promulgate such regulations as are necessary
to facilitate, administer, and promote transfers of loans and guaranteed
and insured portions of loans under this section.
(Pub. L. 93-262, title II, Sec. 205, Apr. 12, 1974, 88 Stat. 80; Pub. L.
100-442, Sec. 2, Sept. 22, 1988, 102 Stat. 1763; Pub. L. 107-331, title
I, Sec. 103(b), Dec. 13, 2002, 116 Stat. 2836.)
Amendments
2002--Pub. L. 107-331 designated existing provisions as subsec. (a),
inserted heading and substituted ``Any loan guaranteed or insured'' for
``Any loan guaranteed'', and added subsecs. (b) to (i).
1988--Pub. L. 100-442 amended section generally. Prior to amendment,
section read as follows: ``Any loan guaranteed hereunder, including the
security given therefor, may be sold or assigned by the lender to any
financial institution subject to examination and supervision by an
agency of the United States or of any State or the District of
Columbia.''
Findings and Purpose
Pub. L. 107-331, title I, Sec. 102, Dec. 13, 2002, 116 Stat. 2835,
provided that:
``(a) Findings.--Congress finds that--
``(1) the Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.)
was intended to provide Native American borrowers with access to
commercial sources of capital that otherwise would not be available
through the guarantee or insurance of loans by the Secretary of the
Interior;
``(2) although the Secretary of the Interior has made loan
guarantees and insurance available, use of those guarantees and that
insurance by lenders to benefit Native American business borrowers
has been limited;
``(3) twenty-seven years after the date of enactment of the
Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.) [Pub. L. 93-
262, which was approved Apr. 12, 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) use by commercial lenders of the available loan insurance
and guarantees may be limited by liquidity and other capital market-
driven concerns; and
``(5) it is in the best interest of the insured and guaranteed
loan program of the Department of the Interior--
``(A) to encourage the orderly development and expansion of
a secondary market for loans guaranteed or insured by the
Secretary of the Interior; and
``(B) to expand the number of lenders originating loans
under the Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.).
``(b) Purpose.--The purpose of this Act [see Short Title of 2002
Amendment note set out under section 1451 of this title] is to reform
and clarify the Indian Financing Act of 1974 (25 U.S.C. 1451 et seq.) in
order to--
``(1) stimulate the use by lenders of secondary market investors
for loans guaranteed or insured under a program administered by the
Secretary of the Interior;
``(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 to establish and administer a system
for the orderly transfer of those loans; and
``(5)(A) authorize the Secretary to promulgate regulations to
encourage and expand a secondary market program for loans guaranteed
or insured by the Secretary; and
``(B) allow the pooling of those loans as the secondary market
develops.''
Section Referred to in Other Sections
This section is referred to in section 1499 of this title.
