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Title 46 — ShippingRelease 119-73

§53722 Actions by Secretary or Administrator

Title 46 › Subtitle Subtitle V— - Merchant Marine › Part Part C— - Financial Assistance Programs › Chapter CHAPTER 537— - LOANS AND GUARANTEES › Subchapter SUBCHAPTER II— - DEFAULT PROVISIONS › § 53722

Last updated Apr 6, 2026|Official source

Summary

When a borrower fails to keep up with a loan or related deal with the Secretary or the Administrator, the Secretary or Administrator can either take over the borrower’s rights and duties and pay missed amounts, then tell the lender, or simply notify the lender of the default. If the Secretary or Administrator only notifies, the lender can demand payment of the unpaid principal and unpaid interest. That demand must come within the earlier of any time set in the guarantee or 60 days after the notice. If the lender demands payment, the Secretary or Administrator must pay the unpaid principal and interest by the earlier of any time set in the guarantee or 30 days after the demand. A guarantee stays in force after the Secretary or Administrator takes over. When handling a default, they must act to get the best net present value from selling related assets, try to cut losses, make sure competition is fair and bidders are treated the same, require an independent appraisal of assets, and promptly refer collection matters to the Attorney General when appropriate.

Full Legal Text

Title 46, §53722

Shipping — Source: USLM XML via OLRC

(a)On default under an obligation or related agreement between the Secretary or Administrator and the obligor, the Secretary or Administrator, on terms that may be provided in the obligation or agreement, may—
(1)assume the obligor’s rights and duties under the obligation or agreement, make any payment in default, and notify the obligee or the obligee’s agent of the default and the Secretary’s or Administrator’s assumption; or
(2)notify the obligee or the obligee’s agent of the default.
(b)(1)If the Secretary or Administrator proceeds under subsection (a)(2), the obligee or the obligee’s agent may demand that the Secretary or Administrator pay the unpaid principal amount of the obligation and the unpaid interest on the obligation. The demand must be made within the earlier of—
(A)a period that may be specified in the guarantee or a related agreement; or
(B)60 days from the date of the Secretary’s or Administrator’s notice.
(2)If a demand is made under paragraph (1), the Secretary or Administrator shall pay to the obligee or the obligee’s agent the unpaid principal amount of the obligation and the unpaid interest on the obligation to the date of payment. Payment shall be made within the earlier of—
(A)a period that may be specified in the guarantee or a related agreement; or
(B)30 days from the date of the demand.
(c)A guarantee of an obligation remains in effect after an assumption of the obligation by the Secretary or Administrator.
(d)If there is a default on an obligation, the Secretary or Administrator shall conduct operations under this chapter in a manner that—
(1)maximizes the net present value return from the sale or disposition of assets associated with the obligation, including prompt referral to the Attorney General for collection as appropriate;
(2)minimizes the amount of any loss realized in the resolution of the guarantee;
(3)ensures adequate competition and fair and consistent treatment of offerors; and
(4)requires appraisal of assets by an independent appraiser.

Legislative History

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 53722(a), (b)46 App.:1275(b).June 29, 1936, ch. 858, title XI, § 1105(b), as added June 23, 1938, ch. 600, § 46, 52 Stat. 971; Aug. 15, 1953, ch. 513, § 3, 67 Stat. 626; Sept. 3, 1954, ch. 1265, § 5, 68 Stat. 1272; Aug. 7, 1956, ch. 1026, § 1(e)–(g), 70 Stat. 1087; Pub. L. 85–520, July 15, 1958, 72 Stat. 358; Pub. L. 91–469, § 33, Oct. 21, 1970, 84 Stat. 1035; restated Pub. L. 92–507, § 3, Oct. 19, 1972, 86 Stat. 914; Pub. L. 97–31, § 12(136), Aug. 6, 1981, 95 Stat. 166; Pub. L. 98–595, § 1(9), Oct. 30, 1984, 98 Stat. 3131. 53722(c)46 App.:1273(e) (last sentence).June 29, 1936, ch. 858, title XI, § 1103(e) (last sentence), as added Pub. L. 98–595, § 1(1), Oct. 30, 1984, 98 Stat. 3130. 53722(d)46 App.:1275(f).June 29, 1936, ch. 858, title XI, § 1105(f), as added Pub. L. 108–136, title XXXV, § 3524, Nov. 24, 2003, 117 Stat. 1801. In subsection (a), before paragraph (1), the words “an obligation or related agreement” are substituted for “a mortgage, loan agreement, or other security agreement” for consistency in the revised chapter.

Editorial Notes

Amendments

2008—Pub. L. 110–181, § 3522(b), repealed Pub. L. 109–163, § 3507(a)(1)(C), (F). See 2006 Amendment note below. Pub. L. 110–181, 3522(a)(10)(B), (11), incorporated the substance of the amendment by Pub. L. 109–163, § 3507(a)(1)(C), (F), into this section by inserting “or Administrator” after “Secretary” in section catchline and wherever appearing in subsecs. (a) to (c) and “or Administrator’s” after “Secretary’s” in subsecs. (a)(1) and (b)(1)(B). See 2006 Amendment note below and section 18(a) of Pub. L. 109–304, set out as a Legislative Purpose and

Construction

note preceding section 101 of this title. Subsec. (d). Pub. L. 110–181, § 3522(a)(10)(B), inserted “or Administrator” after “Secretary” in introductory provisions. 2006—Pub. L. 109–163, § 3507(a)(1)(C), (F), which directed the amendment of section 1273(e) and 1275(b) of the former Appendix to this title from which this section was derived in part, was repealed by Pub. L. 110–181, § 3522(b). See 2008 Amendment notes and

Historical and Revision Notes

above.

Reference

Citations & Metadata

Citation

46 U.S.C. § 53722

Title 46 — Shipping

Last Updated

Apr 6, 2026

Release point: 119-73