regulation

§ 103.31

25 CFR Ch. I (4–1–06 Edition)

and personal property used in the borrower’s business or as collateral for the
loan, and on all applicable payroll
taxes;
(g) Assure, to the extent reasonably
practicable, that all required insurance
policies remain in effect, including hazard, liability, key man life, and other
kinds of insurance, in amounts reasonably necessary to protect the interests
of the borrower, the borrower’s business, and the lender;
(h) Assure, to the extent reasonably
practicable, that the borrower remains
in compliance with all applicable Federal, State, local and tribal laws, including environmental laws and laws
concerning the preservation of historical and archeological sites and data;
(i) Assure, to the extent reasonably
practicable, that the borrower causes
any construction, renovation, or demolition work funded by the loan to proceed in accordance with approved construction contracts and plans and specifications, which must be sufficient in
scope and detail to adequately govern
the work;
(j) Reserve for itself and BIA the
right to inspect the borrower’s business
records and all loan collateral at any
reasonable time;
(k) Promptly notify the borrower in
writing of any material breach by the
borrower of the terms of its loan, with
specific instructions on how to cure the
breach and a deadline for doing so;
(l) Participate in any probate, receivership, bankruptcy, or similar proceeding involving the borrower and any
guarantor or co-maker of the borrower’s debt, to the extent necessary to
maintain the greatest possible rights
to repayment; and
(m) Otherwise seek to avoid and mitigate any potential loss arising from
the loan, using at least that level of
care the lender would use if it did not
have a BIA loan guaranty or insurance
coverage.
§ 103.31 What loan servicing requirements apply to BIA?
Once a lender extends a loan that is
guaranteed or insured under the Program, BIA has no responsibility for decisions concerning it, except for:
(a) Any approvals required under this
part;

(b) Any decisions reserved to BIA
under conditions of BIA’s guaranty certificate or insurance coverage; and
(c) Decisions concerning a loan that
the lender has assigned to BIA or to
which BIA is subrogated by virtue of
paying a claim based on a guaranty
certificate or insurance coverage.
§ 103.32 What sort of loan documentation does BIA expect the lender to
maintain?
For every loan guaranteed or insured
under the Program, the lender must
maintain:
(a) BIA’s original loan guaranty certificate or insurance coverage approval
letter, if applicable;
(b) Original signed and/or certified
counterparts of all final loan documents, including those listed in § 103.17
(concerning documents required for
loan closing), all renewals, modifications, and additions to those documents, and signed settlement statements;
(c) Originals or copies, as appropriate, of all documents gathered by
the lender under §§ 103.12, 103.13 and
103.26 (concerning information submitted by the borrower in its loan application, and information supplied to
BIA in the lender’s loan guaranty or
insurance coverage application);
(d) Originals or copies, as appropriate, of all applicable insurance binders or certificates, including without
limitation hazard, liability, key man
life, and title insurance;
(e) A complete and current history of
all loan transactions, including dated
disbursements, payments, adjustments,
and notes describing all contacts with
the borrower;
(f) Originals or copies, as appropriate,
of all correspondence with the borrower, including default notices and
evidence of receipt;
(g) Originals or copies, as appropriate, of all correspondence, notices,
news items or other information concerning the borrower, whether gathered by the lender or furnished to it,
containing material information about
the borrower and its business operations;
(h) Originals or copies, as appropriate, of all advertisements, notices,
title instruments, accountings, and

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Bureau of Indian Affairs, Interior

§ 103.34

other documentation of efforts to liquidate loan collateral; and
(i) Originals or copies, as appropriate,
of all notices, pleadings, motions, orders, and other documents associated
with any legal proceeding involving the
lender and the borrower or its assets,
including without limitation judicial
or non-judicial foreclosure proceedings,
suits to collect payment, bankruptcy
proceedings, probate proceedings, and
any settlement associated with threatened or actual litigation.
§ 103.33 Are there reporting requirements?
(a) The lender must periodically report the borrower’s loan payment history so that BIA can recalculate the
government’s
contingent
liability.
Loan payment history reports must be
quarterly unless BIA provides otherwise for a particular loan. These reports can be in any format the lender
desires, as long as they contain:
(1) The lender’s name;
(2) The borrower’s name;
(3) A reference to BIA’s Loan Guaranty Certificate or Loan Insurance
Agreement number;
(4) The lender’s internal loan number; and
(5) The date and amount of all loan
balance activity for the reporting period.
(b) If applicable, the lender must supply a calculation of any interest subsidy payments that are due, as indicated in § 103.23.
(c) If there is a transfer of any or all
of the lender’s ownership interest in
the loan, the party receiving the ownership interest may be required to notify BIA, as indicated in §§ 103.28 and
103.29.
(d) If there is a default on the loan,
the lender must notify BIA, as indicated in §§ 103.35 and 103.36.
(e) If the borrower ceases to qualify
for a BIA-guaranteed or insured loan
under § 103.25(b), the lender must
promptly notify BIA even if the lender
does not pursue default remedies under
§§ 103.35 and 103.36. This notice allows
BIA to eliminate the guaranty or insurance coverage from its active recordkeeping system.
(f) If the loan is prepaid in full, the
lender must promptly notify BIA in

writing so that BIA can eliminate the
guaranty or insurance coverage from
its active recordkeeping system.
(g) If a lender changes its name, it
should notify BIA in accordance with
§ 103.11(c).
§ 103.34 What if the lender and borrower decide to change the terms of
the loan?
(a) The lender must obtain written
BIA approval before modifying a loan
guaranteed or insured under the Program, if the change will:
(1) Increase the borrower’s outstanding principal amount (if a term
loan), or maximum available credit (if
a revolving loan).
(i) BIA will approve or disapprove a
loan increase based upon the lender’s
explanation of the borrower’s need for
additional funding, and updated information of the sort required under
§§ 103.12, 103.13, and 103.26, as applicable.
(ii) Upon approval by BIA and payment of an additional guaranty or insurance premium in accordance with
§§ 103.8 and 103.19 and this section, the
entire outstanding loan amount, as
modified, will be guaranteed or insured
(as the case may be) to the extent BIA
specifies. The lender must pay the additional premium only on the increase
in the outstanding principal amount of
the loan (if a term loan) or the increase
in the credit limit available to the borrower (if a revolving loan).
(iii) Lenders may not increase the
outstanding principal amount of a loan
guaranteed or insured under the Program if a significant purpose of doing
so would be to allow the borrower to
pay accrued loan interest it otherwise
would have difficulty paying.
(2) Permanently adjust the loan repayment schedule.
(3) Increase a fixed interest rate, convert a fixed interest rate to an adjustable interest rate, or convert an adjustable interest rate to a fixed interest
rate.
(4) Allow any changes in the identity
or organizational structure of the borrower.
(5) Allow any material change in the
use of loan proceeds or the nature of
the borrower’s business.
(6) Release any collateral taken as
security for the loan, except items sold

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