regulation

§ 103.13

25 CFR Ch. I (4–1–06 Edition)

amount, purpose, interest rate, schedule of payments, and security (including insurance requirements), and the
lender’s terms and conditions for funding;
(g) The lender’s good faith estimate
of any loan-related fees and costs it
will charge the borrower, as authorized
under this part;
(h) If any significant portion of the
loan will be used to finance construction, renovation, or demolition work,
the lender’s:
(1) Insurance and bonding requirements for the work;
(2) Proposed draw requirements; and
(3) Proposed work inspection procedures;
(i) If any significant portion of the
loan will be used to refinance or otherwise retire existing indebtedness:
(1) A clear description of all loans
being paid off, including the names of
all makers, cosigners and guarantors,
maturity dates, payment schedules,
uncured delinquencies, collateral, and
payoff amounts as of a specific date;
and
(2) A comparison of the terms of the
loan or loans being paid off and the
terms of the new loan, identifying the
advantages of the new loan over the
loan being paid off.
§ 103.13 How does a lender apply for
loan insurance coverage?
BIA-approved lenders can make loans
insured under the Program in two
ways, depending on the size of the loan:
(a) For loans in an original principal
amount of up to $100,000 per borrower,
the lender can make each loan in accordance with the lender’s loan insurance agreement, without specific prior
approval from BIA.
(b) For loans in an original principal
amount of over $100,000, the lender
must seek BIA’s specific prior approval
in each case. The lender must submit a
loan insurance coverage application request form, together with the same information required for a loan guaranty
under § 103.12, except for the information required by § 103.12(a).
(c) The lender must submit a loan insurance application package even for a
loan of less than $100,000 if:
(1) The total outstanding balance of
all insured loans the lender is extend-

ing to the borrower under the Program
exceeds $100,000; or
(2) the lender makes a request for interest subsidy, pursuant to § 103.21.
§ 103.14 Can BIA request additional information?
BIA may require the lender to provide additional information, whenever
BIA believes it needs the information
to properly evaluate a new lender,
guaranty application, or insurance application. After BIA issues a loan guaranty or insurance coverage, the lender
must let BIA inspect the lender’s
records at any reasonable time for information concerning the Program.
§ 103.15 Are there any prohibited loan
terms?
A loan agreement guaranteed or insured under the Program may not contain:
(a) Charges by the lender styled as
‘‘points,’’ loan origination fees, or any
similar fees (however named), except
that if authorized in the loan agreement, the lender may charge the borrower a reasonable annual loan servicing fee that:
(1) Is not included as part of the loan
principal; and
(2) Does not bear interest;
(b) Charges of any kind by the lender
or by any third party except for the
reasonable and customary cost of legal
and architectural services, broker commissions, surveys, compliance inspections, title inspection and/or insurance,
lien searches, appraisals, recording
costs, premiums for required hazard, liability, key man life, and other kinds
of insurance, and such other charges as
BIA may approve in writing;
(c) A loan repayment term of over 30
years;
(d) Payments scheduled less frequently than annually;
(e) A prepayment penalty, unless the
terms of the penalty are clearly specified in BIA’s loan guaranty or loan insurance conditions;
(f) An interest rate greater than what
BIA considers reasonable, taking into
account the range of rates prevailing in
the private market for similar loans;
(g) A variable interest rate, unless
the rate is tied to a specific prime rate

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