regulation

§ 103.35

25 CFR Ch. I (4–1–06 Edition)

in the ordinary course of business and
promptly replaced by similar items of
collateral, such as inventory.
(7) Allow the borrower to move any
significant portion of its business operations to a location that is not on or
near an Indian reservation or tribal
service area recognized by BIA.
(8) Be likely to materially increase
the risk of a claim on BIA’s guaranty
or insurance coverage, or materially
reduce the aggregate value of the collateral securing the loan.
(9) Cure a default for which BIA is to
receive notice under § 103.35(b).
(b) In the case of an insured loan, the
amount of which will not exceed
$100,000 when combined with all other
insured loans from the lender to the
borrower, the lender need not obtain
BIA’s prior approval to make any of
the loan modifications indicated in
§ 103.34(a), except as provided in
§ 103.21(b). However, all loan modifications must remain consistent with the
lender’s loan insurance agreement with
BIA, and in the event of an increase in
the borrower’s outstanding principal
amount (if a term loan), or maximum
available credit (if a revolving loan),
the lender must send BIA an additional
premium payment in accordance with
§§ 103.8, 103.19 and this section. 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). To the extent a
loan modification changes any of the
information supplied to BIA under
§ 103.18(b)(3), the lender also must
promptly notify BIA of the new information.
(c) Subject to any applicable BIA
loan guaranty or insurance coverage
conditions, a lender may extend additional loans to a borrower without BIA
approval, if the additional loans are
not to be guaranteed or insured under
the Program.

otherwise meet the standard of care established for the lender in this part.
The lender’s notice to the borrower
should be sent as soon as possible after
the default, but in any event before the
lender’s notice to BIA under paragraph
(b) of this section. For purposes of the
Program, ‘‘default’’ will mean a default
as defined in this part.
(b) The lender also must send written
notice of the default to BIA by certified mail (return receipt requested),
or by a nationally-recognized overnight
delivery service (signature of recipient
required) within 60 calendar days of the
default, unless the default is fully
cured before that deadline. This notice
is required even if the lender grants the
borrower
a
forbearance
under
§ 103.36(a). One purpose of the notice is
to give BIA the opportunity to intervene and seek assistance for the borrower, even though BIA has no duty,
either to the lender or the borrower, to
do so. Another purpose of the notice is
to permit BIA to plan for a possible
loss claim from the lender, under
§ 103.36(d). The lender’s notice must
clearly indicate:
(1) The identity of the borrower;
(2) The applicable Program guaranty
certificate or insurance agreement
number;
(3) The date and nature of all bases
for default;
(4) If a monetary default, the amount
of past due principal and interest, the
date through which interest has been
calculated, and the amount of any late
fees, precautionary advances, or other
amounts the lender claims;
(5) The nature and outcome of any
correspondence or other contacts with
the borrower concerning the default;
and
(6) The precise nature of any action
the borrower could take to cure the default.

Subpart G—Default and Payment
by BIA

§ 103.36 What options and remedies
does the lender have if the borrower defaults on the loan?

§ 103.35 What must the lender do if the
borrower defaults on the loan?
(a) The lender must send written notice of the default to the borrower, and

(a) The lender may grant the borrower a temporary forbearance, even
beyond any default cure periods specified in the loan documents, if doing so

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