43 U.S.C. § 2423 — Loan guarantees

Page 639 TITLE 43—PUBLIC LANDS § 2424 (d) Criteria for rural water supply projects A rural water supply project that is deter- mined to be feasible under section 2405 of this title is eligible for a loan guarantee under sec- tion 2423 of this title. (Pub. L. 109–451, title II, § 203, Dec. 22, 2006, 120 Stat. 3357.) § 2423. Loan guarantees (a) Authority Subject to the availability of appropriations, the Secretary may make available to lenders for a project meeting the eligibility criteria estab- lished in section 2422 of this title loan guaran- tees to supplement private-sector or lender fi- nancing for the project. (b) Terms and limitations (1) In general Loan guarantees under this section for a project shall be on such terms and conditions and contain such covenants, representations, warranties, and requirements as the Secretary determines to be appropriate to protect the fi- nancial interests of the United States. (2) Amount Loan guarantees by the Secretary shall not exceed an amount equal to 90 percent of the cost of the project that is the subject of the loan guarantee, as estimated at the time at which the loan guarantee is issued. (3) Interest rate An obligation shall bear interest at a rate that does not exceed a level that the Secretary determines to be appropriate, taking into ac- count the prevailing rate of interest in the pri- vate sector for similar loans and risks. (4) Amortization A loan guarantee under this section shall provide for complete amortization of the loan guarantee within not more than 40 years. (5) Nonsubordination An obligation shall be subject to the condi- tion that the obligation is not subordinate to other financing. (c) Prepayment and refinancing Any prepayment or refinancing terms on a loan guarantee shall be negotiated between the non-Federal borrower and the lender with the consent of the Secretary. (Pub. L. 109–451, title II, § 204, Dec. 22, 2006, 120 Stat. 3358.) § 2424. Defaults (a) Payments by Secretary (1) In general If a borrower defaults on the obligation, the holder of the loan guarantee shall have the right to demand payment of the unpaid amount from the Secretary. (2) Payment required By such date as may be specified in the loan guarantee or related agreements, the Sec- retary shall pay to the holder of the loan guar- antee the unpaid interest on, and unpaid prin- cipal of, the obligation with respect to which the borrower has defaulted, unless the Sec- retary finds that there was not default by the borrower in the payment of interest or prin- cipal or that the default has been remedied. (3) Forbearance Nothing in this subsection precludes any for- bearance by the holder of the obligation for the benefit of the non-Federal borrower that may be agreed on by the parties to the obliga- tion and approved by the Secretary. (b) Subrogation (1) In general If the Secretary makes a payment under subsection (a), the Secretary shall be sub- rogated to the rights of the recipient of the payment as specified in the loan guarantee or related agreements, including, as appropriate, the authority (notwithstanding any other pro- vision of law) to— (A) complete, maintain, operate, lease, or otherwise dispose of any property acquired pursuant to the loan guarantee or related agreements; or (B) permit the non-Federal borrower, pur- suant to an agreement with the Secretary, to continue to pursue the purposes of the project if the Secretary determines the pur- poses to be in the public interest. (2) Superiority of rights The rights of the Secretary, with respect to any property acquired pursuant to a loan guarantee or related agreement, shall be supe- rior to the rights of any other person with re- spect to the property. (c) Payment of principal and interest by Sec- retary With respect to any obligation guaranteed under this section, the Secretary may enter into a contract to pay, and pay, holders of the obliga- tion, for and on behalf of the non-Federal bor- rower, from funds appropriated for that purpose, the principal and interest payments that be- come due and payable on the unpaid balance of the obligation if the Secretary finds that— (1)(A) the non-Federal borrower is unable to meet the payments and is not in default; (B) it is in the public interest to permit the non-Federal borrower to continue to pursue the purposes of the project; and (C) the probable net benefit to the Federal Government in paying the principal and inter- est will be greater than that which would re- sult in the event of a default; (2) the amount of the payment that the Sec- retary is authorized to pay shall be no greater than the amount of principal and interest that the non-Federal borrower is obligated to pay under the agreement being guaranteed; and (3) the borrower agrees to reimburse the Sec- retary for the payment (including interest) on terms and conditions that are satisfactory to the Secretary. (d) Action by Attorney General (1) Notification If the non-Federal borrower defaults on an obligation, the Secretary shall notify the At- torney General of the default.