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12 U.S.C. § 4713a — Guarantees for bonds and notes issued for community or economic development purposes

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12 U.S.C. § 4713a — Guarantees for bonds and notes issued for community or economic development purposes

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Source file: Laws/federal/codes/united-states-code/title-12/section-4713a-guarantees-for-bonds-and-notes-issued-for-community-or-economic-developm--28a34172f5.md
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Source location: Title 12, Chapter 47, § 4713a; chapter-047-community-development-banking.md

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**(a) Definitions** In this section, the following definitions shall apply: (1) **Eligible community development financial institution** — The term “eligible community development financial institution” means a community development financial institution (as described in section 1805.201 of title 12, Code of Federal Regulations, or any successor thereto) certified by the Secretary that has applied to a qualified issuer for, or been granted by a qualified issuer, a loan under the Program. (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](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4707/b&num=0&edition=prelim); and (B) includes the provision of community or economic development in low-income or underserved rural areas. (3) **Guarantee** — The term “guarantee” means a written agreement between the Secretary and a qualified issuer (or trustee), pursuant to which the Secretary ensures repayment of the verifiable losses of principal, interest, and call premium, if any, on notes or bonds issued by a qualified issuer to finance or refinance loans to eligible community development financial institutions. (4) **Loan** — The term “loan” means any credit instrument that is extended under the Program for any eligible community or economic development purpose. (5) **Master servicer** (A) *In general* — The term “master servicer” means any entity approved by the Secretary in accordance with subparagraph (B) to oversee the activities of servicers, as provided in subsection (f)(4). (B) *Approval criteria for master servicers* — The Secretary shall approve or deny any application to become a master servicer under the Program not later than 90 days after the date on which all required information is submitted to the Secretary, based on the capacity and experience of the applicant in— (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** — The term “Program” means the guarantee Program for bonds and notes issued for eligible community or economic development purposes established under this section. (7) **Program administrator** — The term “Program administrator” means an entity designated by the issuer to perform administrative duties, as provided in subsection (f)(2). (8) **Qualified issuer** (A) *In general* — The term “qualified issuer” means a community development financial institution (or any entity designated to issue notes or bonds on behalf of such community development financial institution) that meets the qualification requirements of this paragraph. (B) *Approval criteria for qualified issuers* (i) *In general* — The Secretary shall approve a qualified issuer for a guarantee under the Program in accordance with the requirements of this paragraph, and such additional requirements as the Secretary may establish, by regulation. (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* — Not later than 30 days after the date of a request by a qualified issuer for approval of a guarantee under the Program, the Secretary shall provide an opinion regarding compliance by the issuer with the requirements of the Program under this section. (ii) *Timing* — The Secretary shall approve or deny a guarantee under this section after consideration of the opinion provided to the Secretary under clause (i), and in no case later than 90 days after receipt of all required information by the Secretary with respect to a request for such guarantee. (9) **Secretary** — The term “Secretary” means the Secretary of the Treasury. (10) **Servicer** — The term “servicer” means an entity designated by the issuer to perform various servicing duties, as provided in subsection (f)(3). **(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** — A capital distribution plan meets the requirements of this subsection, if not less than 90 percent of the principal amount of guaranteed bonds or notes (other than costs of issuance fees) are used to make loans for any eligible community or economic development purpose, measured annually, beginning at the end of the 1-year period beginning on the issuance date of such guaranteed bonds or notes. (2) **Relending account** — Not more than 10 percent of the principal amount of guaranteed bonds or notes, multiplied by an amount equal to the outstanding principal balance of issued notes or bonds, minus the risk-share pool amount under subsection (d), may be held in a relending account and may be made available for new eligible community or economic development purposes. (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** — If a qualified issuer fails to meet the requirements of paragraph (1) by the end of the 90-day period beginning at the end of the annual measurement period, repayment shall be made on that portion of bonds or notes necessary to bring the bonds or notes that remain outstanding after such repayment into compliance with the 90 percent requirement of paragraph (1). (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** Each qualified issuer shall, during the term of a guarantee provided under the Program, establish a risk-share pool, capitalized by contributions from eligible community development financial institution participants an amount equal to 3 percent of the guaranteed amount outstanding on the subject notes and bonds. **(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* — The Secretary shall issue not more than 10 guarantees in any calendar year under the Program. (B) *Guarantee amount* — The Secretary may not guarantee any amount under the Program equal to less than $100,000,000, but the total of all such guarantees in any fiscal year may not exceed $1,000,000,000. **(f) Servicing of transactions** (1) **In general** — To maximize efficiencies and minimize cost and interest rates, loans made under this section may be serviced by qualified Program administrators, bond servicers, and a master servicer. (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** — A qualified issuer that receives a guarantee issued under this section on a bond or note shall pay a fee to the Secretary, in an amount equal to 10 basis points of the amount of the unpaid principal of the bond or note guaranteed. (2) **Payment** — A qualified issuer shall pay the fee required under this subsection on an annual basis. (3) **Use of fees** — Fees collected by the Secretary under this subsection shall be used to reimburse the Department of the Treasury for any administrative costs incurred by the Department in implementing the Program established under this section. **(h) Authorization of appropriations** (1) **In general** — There are authorized to be appropriated to the Secretary, such sums as are necessary to carry out this section. (2) **Use of fees** — To the extent that the amount of funds appropriated for a fiscal year under paragraph (1) are not sufficient to carry out this section, the Secretary may use the fees collected under subsection (g) for the cost of providing guarantees of bonds and notes under this section. **(i) Investment in guaranteed bonds ineligible for Community Reinvestment Act purposes** Notwithstanding any other provision of law, any investment by a financial institution in bonds or notes guaranteed under the Program shall not be taken into account in assessing the record of such institution for purposes of the Community Reinvestment Act of 1977 ([12 U.S.C. 2901](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2901&num=0&edition=prelim) [et seq.]). **(j) Administration** (1) **Regulations** — Not later than 1 year after September 27, 2010, the Secretary shall promulgate regulations to carry out this section. (2) **Implementation** — Not later than 2 years after September 27, 2010, the Secretary shall implement this section. **(k) Termination** This section is repealed, and the authority provided under this section shall terminate, on September 30, 2014.11 See Termination of Section note below.

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 2901 — Congressional findings and statement of purpose

**(a)** The Congress finds that— (1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business; (2) the convenience and needs of communities include the need for credit services as well as deposit services; and (3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered. **(b)** It is the purpose of this chapter to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.

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Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 631 — Declaration of policy

**(a) Aid, counsel, assistance, etc., to small business concerns** The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation. **(b) Assistance to compete in international markets** (1) It is the declared policy of the Congress that the Federal Government, through the Administrator of the Small Business Administration, acting through the Associate Administrator for International Trade, and in cooperation with the Department of Commerce and other relevant State and Federal agencies, should aid and assist small businesses, as defined under this chapter, to increase their ability to compete in international markets by— (A) enhancing their abil

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15 U.S.C. § 632 — Definitions

**(a) Small business concerns** (1) **In general** — For the purposes of this chapter, a small-business concern, including but not limited to enterprises that are engaged in the business of production of food and fiber, ranching and raising of livestock, aquaculture, and all other farming and agricultural related industries, shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation. (2) **Establishment of size standards** (A) *In general* — In addition to the criteria specified in paragraph (1) and subject to the requirements specified under subparagraph (C), the Administrator may specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purposes of this chapter or any other Act. (B) *Additional criteria* — The standards described in paragraph (1) may utilize number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors. (C) *Requirements* — Unless specifically authorized by statute, no Federal department (including the Administration when acting pursuant to subparagraph (A)) or agency may prescribe a size standard for categorizing a business concern as a small business concern, unless such proposed size standard— (i) is proposed after an opportunity for public notice and comment; (ii) provides for determining— (I) the size of a manufacturing concern as measured by the manufacturing concern’s average employment based upon employment during each of the manufacturing concern’s pay periods for the preceding 24 months; (II) the size of a business concern providing services on the basis of the annual average gross receipts of the business concern over

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 2901 — Congressional findings and statement of

Page 1473 TITLE 12—BANKS AND BANKING § 2902 Act are classified generally to subchapters I (§ 1702 et seq.) and II (§ 1707 et seq.), respectively, of chapter 13 of this title. For complete classification of this Act to the Code, see section 1701 of this title and Tables. AMENDMENTS 1989—Pub. L. 101–73 inserted ‘‘(or for which completed applications are received)’’ after ‘‘approved’’. 1988—Pub. L. 100–242 inserted ‘‘(and for each mort- gagee making mortgage loans exempted under section 2803(g) of this title)’’ after ‘‘section 2805(b) of this title’’. 1983—Pub. L. 98–181 substituted ‘‘primary metropoli- tan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary metropolitan statis- tical areas’’ for ‘‘standard metropolitan statistical areas’’ in two places. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1989 AMENDMENT Amendment by Pub. L. 101–73 applicable to each cal- endar year beginning after Dec. 31, 1989, see section 1211(k) of Pub. L. 101–73, set out as a note under section 2802 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–242 applicable to the por- tion of calendar year 1988 that begins Aug. 19, 1988, and to each calendar year beginning after Dec. 31, 1988, see section 565(a)(4) of Pub. L. 100–242, as amended, set out as a note under section 2802 of this title. § 2811. Repealed. Pub. L. 100–242, title V, § 565(b), Feb. 5, 1988, 101 Stat. 1945 Section, Pub. L. 94–200, title III, § 312, as added Pub. L. 96–399, title III, § 340(c), Oct. 8, 1980, 94 Stat. 1659; amended Pub. L. 99–120, § 5(c), Oct. 8, 1985, 99 Stat. 504; Pub. L. 99–156, § 5(c), Nov. 15, 1985, 99 Stat. 817; Pub. L. 99–219, § 5(c), Dec. 26, 1985, 99 Stat.

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4713a — Guarantees for bonds and notes issued

Page 1741 TITLE 12—BANKS AND BANKING § 4713a ministrator determines to be appropriate to carry out this section. (5) Exceptions to applicability Notwithstanding paragraphs (1) through (4) of this subsection, subsections (a)(1) and (e)(2) of section 233 of the Bank Enterprise Act of 1991 [12 U.S.C. 1834a(a)(1), (e)(2)], and any other provision of the Federal Deposit Insurance Act [12 U.S.C. 1811 et seq.] relating to the Bank En- terprise Act of 1991, do not apply to the Ad- ministrator for purposes of this subchapter. (b) Provisions relating to administration of this section (1) New lifeline accounts In applying section 233 of the Bank Enter- prise Act of 1991 [12 U.S.C. 1834a] for purposes of this section, the Administrator shall treat the provision of new lifeline accounts by an in- sured depository institution as an activity which is qualified to be taken into account under section 233(a)(2)(A) of such Act. (2) Determination of assessment credit For the purpose of this subchapter, section 233(a)(3) of the Bank Enterprise Act of 1991 (12 U.S.C. 1834a(a)(3)) shall be applied by sub- stituting the following text: ‘‘(3) Amount of assessment credit ‘‘The amount of an assessment credit which may be awarded to an insured depository insti- tution to carry out the qualified activities of the institution or of the subsidiaries of the in- stitution pursuant to this section for any semiannual period shall be equal to the sum of— ‘‘(A) with respect to qualifying activities described in paragraph (2)(A), the amount which is equal to— ‘‘(i) 5 percent of the sum of the amounts determined under such subparagraph, in the case of an institution which is not a community development financial institu- tion; or ‘‘(ii) 15 percent of the sum of the amounts d

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