12 U.S. Code § 4713a - Guarantees for bonds and notes issued for community or economic development purposes
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”—
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.
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—
(ii) managing regional or national loan intake, processing, or servicing operational systems and infrastructure;
(iv) developing and implementing training and other risk management strategies on a regional or national basis; and
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—
(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.
(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—
(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—
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
(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.
(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;
(A) Annual number of guarantees
The Secretary shall issue not more than 10 guarantees in any calendar year under the Program.
(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;
(3) Duties of servicer
The duties of a servicer shall include—
(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;
(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.
(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.
(i) Investment in guaranteed bonds ineligible for Community Reinvestment Act purposes
Not later than 1 year after September 27, 2010, the Secretary shall promulgate regulations to carry out this section.
Source(Pub. L. 103–325, title I, § 114A, as added Pub. L. 111–240, title I, § 1134,Sept. 27, 2010, 124 Stat. 2515.)
References in Text
The Community Reinvestment Act of 1977, referred to in subsec. (i), is title VIII of Pub. L. 95–128, Oct. 12, 1977, 91 Stat. 1147, which is classified generally to chapter 30 (§ 2901 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 2901 of this title and Tables.
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