12 USC 4713a - Guarantees for bonds and notes issued for community or economic development purposes

U.S Code last checked for updates: Apr 27, 2024

§ 4713a.

Guarantees for bonds and notes issued for community or economic development purposes

(a)

Definitions

In this section, the following definitions shall apply:

(1)

Eligible community development financial institution

(2)

Eligible community or economic development purpose

The term “eligible community or economic development purpose”—

(A)

means any purpose described in section 4707(b) of this title; and

(B)

includes the provision of community or economic development in low-income or underserved rural areas.

(3)

Guarantee

(4)

Loan

(5)

Master servicer

(A)

In general

(B)

Approval criteria for master servicers

(i)

loan administration, servicing, and loan monitoring;

(ii)

managing regional or national loan intake, processing, or servicing operational systems and infrastructure;

(iii)

managing regional or national originator communication systems and infrastructure;

(iv)

developing and implementing training and other risk management strategies on a regional or national basis; and

(v)

compliance monitoring, investor relations, and reporting.

(6)

Program

(7)

Program administrator

(8)

Qualified issuer

(A)

In general

(B)

Approval criteria for qualified issuers

(i)

In general

(ii)

Terms and qualifications

A qualified issuer shall—

(I)

have appropriate expertise, capacity, and experience, or otherwise be qualified to make loans for eligible community or economic development purposes;

(II)

provide to the Secretary—

(aa)

an acceptable statement of the proposed sources and uses of the funds; and

(bb)

a capital distribution plan that meets the requirements of subsection (c)(1); and

(III)

certify to the Secretary that the bonds or notes to be guaranteed are to be used for eligible community or economic development purposes.

(C)

Department opinion; timing

(i)

Department opinion

(ii)

Timing

(9)

Secretary

(10)

Servicer

(b)

Guarantees authorized

The Secretary shall guarantee payments on bonds or notes issued by any qualified issuer, if the proceeds of the bonds or notes are used in accordance with this section to make loans to eligible community development financial institutions—

(1)

for eligible community or economic development purposes; or

(2)

to refinance loans or notes issued for such purposes.

(c)

General program requirements

(1)

In general

(2)

Relending account

(3)

Limitations on unpaid principal balances

The proceeds of guaranteed bonds or notes under the Program may not be used to pay fees (other than costs of issuance fees), and shall be held in—

(A)

community or economic development loans;

(B)

a relending account, to the extent authorized under paragraph (2); or

(C)

a risk-share pool established under subsection (d).

(4)

Repayment

(5)

Prohibited uses

The Secretary shall, by regulation—

(A)

prohibit, as appropriate, certain uses of amounts from the guarantee of a bond or note under the Program, including the use of such funds for political activities, lobbying, outreach, counseling services, or travel expenses; and

(B)

provide that the guarantee of a bond or note under the Program may not be used for salaries or other administrative costs of—

(i)

the qualified issuer; or

(ii)

any recipient of amounts from the guarantee of a bond or note.

(d)

Risk-share pool

(e)

Guarantees

(1)

In general

A guarantee issued under the Program shall—

(A)

be for the full amount of a bond or note, including the amount of principal, interest, and call premiums;

(B)

be fully assignable and transferable to the capital market, on terms and conditions that are consistent with comparable Government-guaranteed bonds, and satisfactory to the Secretary;

(C)

represent the full faith and credit of the United States; and

(D)

not exceed 30 years.

(2)

Limitations

(A)

Annual number of guarantees

(B)

Guarantee amount

(f)

Servicing of transactions

(1)

In general

(2)

Duties of Program administrator

The duties of a Program administrator shall include—

(A)

approving and qualifying eligible community development financial institution applications for participation in the Program;

(B)

compliance monitoring;

(C)

bond packaging in connection with the Program; and

(D)

all other duties and related services that are customarily expected of a Program administrator.

(3)

Duties of servicer

The duties of a servicer shall include—

(A)

billing and collecting loan payments;

(B)

initiating collection activities on past-due loans;

(C)

transferring loan payments to the master servicing accounts;

(D)

loan administration and servicing;

(E)

systematic and timely reporting of loan performance through remittance and servicing reports;

(F)

proper measurement of annual outstanding loan requirements; and

(G)

all other duties and related services that are customarily expected of servicers.

(4)

Duties of master servicer

The duties of a master servicer shall include—

(A)

tracking the movement of funds between the accounts of the master servicer and any other servicer;

(B)

ensuring orderly receipt of the monthly remittance and servicing reports of the servicer;

(C)

monitoring the collection comments and foreclosure actions;

(D)

aggregating the reporting and distribution of funds to trustees and investors;

(E)

removing and replacing a servicer, as necessary;

(F)

loan administration and servicing;

(G)

systematic and timely reporting of loan performance compiled from all bond servicers’ reports;

(H)

proper distribution of funds to investors; and

(I)

all other duties and related services that are customarily expected of a master servicer.

(g)

Fees

(1)

In general

(2)

Payment

(3)

Use of fees

(h)

Authorization of appropriations

(1)

In general

(2)

Use of fees

(i)

Investment in guaranteed bonds ineligible for Community Reinvestment Act purposes

(j)

Administration

(1)

Regulations

(2)

Implementation

(k)

Termination

(Pub. L. 103–325, title I, § 114A, as added Pub. L. 111–240, title I, § 1134, Sept. 27, 2010, 124 Stat. 2515.)

cite as: 12 USC 4713a