§9623 — Title 22 Foreign Relations and Intercourse | U.S. Code

Summary

The Corporation must pay a loan holder the share of a loss the guarantee promises when a borrower defaults, but only after the holder makes extra collection attempts and follows any enforcement steps the Corporation requires. Once the Corporation pays, it takes over the holder’s legal rights to get the money back and must try to recover the amount from the borrower. Payments under the program are limited to the dollar value of the project’s contributions or commitments plus any actual interest, earnings, or profits, though the Corporation can adjust values for replacement cost or use net book value for equity losses. Insured parties and their affiliates must cover at least 10 percent of the Corporation’s exposure, except for loans from banks or similar lenders to unrelated borrowers. The Attorney General enforces the United States’ rights. Lenders and borrowers may agree to delay payments if money is available to cover the government’s costs.

Title 22, §9623

Foreign Relations and Intercourse — Source: USLM XML via OLRC

(a)(1)If the Corporation determines that the holder of a loan guaranteed by the Corporation suffers a loss as a result of a default by a borrower on the loan, the Corporation shall pay to the holder the percent of the loss, as specified in the guaranty contract, after the holder of the loan has made such further collection efforts and instituted such enforcement proceedings as the Corporation may require.

(2)Upon making a payment described in paragraph (1), the Corporation shall ensure the Corporation will be subrogated to all the rights of the recipient of the payment.

(3)The Corporation shall pursue recovery from the borrower of the amount of any payment made under paragraph (1) with respect to the loan.

(b)(1)Except as provided by paragraph (2), compensation for insurance, reinsurance, or a guaranty issued under this subchapter shall not exceed the dollar value of the tangible or intangible contributions or commitments made in the project, plus interest, earnings, or profits actually accrued on such contributions or commitments, to the extent provided by such insurance, reinsurance, or guaranty.

(2)(A)The Corporation may provide that—

(i)appropriate adjustments in the insured dollar value be made to reflect the replacement cost of project assets; and

(ii)compensation for a claim of loss under insurance of an equity investment under section 9621 of this title may be computed on the basis of the net book value attributable to the equity investment on the date of loss.

(3)(A)Notwithstanding paragraph (2)(A)(ii) and except as provided in subparagraph (B), the Corporation shall limit the amount of direct insurance and reinsurance issued under section 9621 of this title with respect to a project so as to require that the insured and its affiliates bear the risk of loss for at least 10 percent of the amount of the Corporation’s exposure to that insured and its affiliates in the project.

(B)The limitation under subparagraph (A) shall not apply to direct insurance or reinsurance of loans provided by banks or other financial institutions to unrelated parties.

(c)The Attorney General shall take such action as may be appropriate to enforce any right accruing to the United States as a result of the issuance of any loan or guaranty under this subchapter.

(d)Nothing in this section shall be construed to preclude any forbearance for the benefit of a borrower that may be agreed upon by the parties to a loan guaranteed by the Corporation if budget authority for any resulting costs to the United States Government (as defined in section 661a of title 2) is available.

Termination of SectionFor termination of section 7 years after Oct. 5, 2018, see section 9624 of this title.

§9623 Payment of Losses

Summary

Title 22, §9623

Notes & Related Subsidiaries

Citations & Metadata