regulation

§ 103.37

25 CFR Ch. I (4–1–06 Edition)

(2) The lender’s failure to provide
timely notice either:
(i) Has not caused any actual or potential prejudice to BIA; or
(ii) Was the result of the lender relying upon specific written advice from a
BIA official.
§ 103.37 What must the lender do to
collect payment under its loan
guaranty certificate or loan insurance coverage?
(a) For guaranteed loans, the lender
must submit a claim for its loss on a
form approved by BIA.
(1) If the lender makes an immediate
claim under § 103.36(d)(1), it must send
BIA the claim for loss within 90 calendar days of the default by certified
mail (return receipt requested), or by a
nationally-recognized overnight delivery service (signature of recipient required). The lender’s claim for loss may
include interest that has accrued on
the outstanding principal amount of
the loan only through the date it submits the claim.
(2) If the lender elects first to liquidate the collateral securing the loan
under § 103.36(d)(2), and has a residual
loss after doing so, it must send BIA
the claim for loss within 30 calendar
days of completing all liquidation efforts. The lender must perform collateral liquidation as expeditiously and
thoroughly as is reasonably possible,
within the standards established by
this part. The lender’s claim for loss
may include interest that has accrued
on the outstanding principal amount of
the loan only through the earlier of:
(i) The date it submits the claim;
(ii) The date the lender gets a judgment of foreclosure or sale (or the nonjudicial equivalent) on the principal
collateral securing the loan; or
(iii) One hundred eighty calendar
days after the date of the default.
(b) For insured loans, after liquidating all loan collateral, the lender
must submit a claim for its loss (if
any) on a form approved by BIA. The
lender must send BIA the claim for loss
by certified mail (return receipt requested), or by a nationally-recognized
overnight delivery service (signature of
recipient required) within 30 calendar
days of completing all liquidation efforts. The lender must perform collat-

eral liquidation as expeditiously and
thoroughly as is reasonably possible,
within the standards established by
this part. The lender’s claim for loss
may include interest that has accrued
on the outstanding principal amount of
the loan through the earlier of:
(1) The date it submits the claim;
(2) The date the lender gets a judgment of foreclosure or sale (or the nonjudicial equivalent) on the principal
collateral securing the loan; or
(3) One hundred eighty calendar days
after the date of the default.
(c) Whenever the lender liquidates
loan collateral under § 103.36(d)(2), it
must vigorously pursue all reasonable
methods of collection concerning the
loan collateral before submitting a
claim for its residual loss (if any) to
BIA. Without limiting the generality of
the preceding sentence, the lender
must:
(1) Foreclose, either judicially or
non-judicially, all rights of redemption
the borrower or any co-maker or guarantor of the loan (other than BIA) may
have in collateral under any mortgage
securing the loan;
(2) Gather and dispose of all personal
property pledged as collateral under
the loan, in accordance with applicable
law;
(3) Exercise all set-off rights the
lender may have under contract or applicable law;
(4) Make demand for payment on the
borrower, all co-makers, and all guarantors of the loan (other than BIA);
and
(5) Participate fully in all bankruptcy proceedings that may arise involving the borrower and any co-maker
or guarantor of the loan. Full participation might include, for example, filing a proof of claim in the case, attending creditors’ meetings, and seeking a
court order releasing the automatic
stay of collection efforts so that the
lender can liquidate affected loan collateral.
(d) BIA may require further information, including without limitation copies of any documents the lender is to
maintain under § 103.32 and all documentation of liquidation efforts, to
help BIA evaluate the lender’s claim
for loss.

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Bureau of Indian Affairs, Interior

§ 103.42

(e) BIA will pay the lender the guaranteed or insured portion of the lender’s claim for loss, to the extent the
claim is based upon reasonably sufficient evidence of the loss and compliance with the requirements of this
part. BIA will render a decision on a
claim for loss within 90 days of receiving all information it requires to properly evaluate the loss.
§ 103.38 Is there anything else for BIA
or the lender to do after BIA makes
payment?
When BIA pays the lender on its
claim for loss, the lender must sign and
deliver to BIA an assignment of rights
to its loan agreement with the borrower, in a document acceptable to
BIA. Immediately upon payment, BIA
is subrogated to all rights of the lender
under the loan agreement with the borrower, and must pursue collection efforts against the borrower and any comaker and guarantor, as required by
law.
§ 103.39 When will BIA refuse to pay
all or part of a lender’s claim?
BIA may deny all or part of a lender’s claim for loss when:
(a) The loan is not guaranteed or insured as indicated in § 103.18;
(b) The guarantee or insurance coverage has become invalid under
§§ 103.28, 103.29, or 103.36(e);
(c) The lender has not met the standard of care indicated in § 103.30;
(d) The lender presents a claim for a
residual loss after attempting to liquidate loan collateral, and:
(1) The lender has not made a reasonable effort to liquidate all security for
the loan;
(2) The lender has taken an unreasonable amount of time to complete its
liquidation efforts, the probable consequence of which has been to reduce
overall prospects of loss recovery; or
(3) The lender’s loss claim is inflated
by unreasonable liquidation expenses
or unjustifiable deductions from collateral liquidation proceeds applied to the
loan balance; or
(e) The lender has otherwise failed in
any material respect to follow the requirements of this part, and BIA can
reasonably attribute some or all of the
lender’s loss to that failure.

§ 103.40 Will BIA make exceptions to
its criteria for denying payment?
(a) BIA will not reduce or deny payment solely on the basis of §§ 103.39(c)
or (e) when the lender making the
claim for loss:
(1) Is a person to whom a previous
lender transferred the loan under
§§ 103.28 or 103.29 before maturity for
value;
(2) Notified BIA of its acquisition of
the loan interest as required by §§ 103.28
or 103.29;
(3) Had no involvement in or knowledge of the actions or circumstances
that would have allowed BIA to reduce
or deny payment to a previous lender;
and
(4) Has not itself violated the standards set forth in §§ 103.39(c) or (e).
(b) If BIA makes payment to a lender
under this section, it may seek reimbursement from the previous lender or
lenders who contributed to the loss by
violating §§ 103.39(c) or (e).
§ 103.41 What happens if a lender violates provisions of this part?
In addition to reducing or eliminating payment on a specific claim for
loss, BIA may either temporarily suspend, or permanently bar, a lender
from making or acquiring loans under
the Program if the lender repeatedly
fails to abide by the requirements of
this part, or if the lender significantly
violates the requirements of this part
on any single occasion.
§ 103.42 How long must a lender comply with Program requirements?
(a) A lender must comply in general
with Program requirements during:
(1) The effective period of its loan
guaranty agreement or loan insurance
agreement; and
(2) Whatever additional period is necessary to resolve any outstanding loan
guaranty or insurance claims or coverage the lender may have.
(b) Except as otherwise required by
law, a lender must maintain records
with respect to a particular loan for 6
years after either:
(1) The loan is repaid in full; or
(2) The lender accepts payment from
BIA for a loss on the loan, pursuant to
a guaranty certificate or an insurance
agreement.

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