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Title 46 — ShippingRelease 119-73not60

§53722 Actions by Secretary or Administrator

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

Last updated Apr 5, 2026|Official source

Summary

When a borrower misses a payment on a loan or related deal, the Secretary or Administrator can do one of two things. They can step into the borrower’s shoes, take over the rights and duties, make missed payments, and tell the lender. Or they can just notify the lender that the borrower defaulted. If the lender is only notified, the lender must ask for payment of the unpaid principal and unpaid interest either within the shorter of the time set in the guarantee or 60 days after the notice. If the lender makes that demand, the Secretary or Administrator must pay the unpaid principal and interest up to the payment date within the shorter of the time set in the guarantee or 30 days after the demand. The loan guarantee still stays in effect if the Secretary or Administrator takes over the loan. If there is a default, the Secretary or Administrator must handle the related assets and sales to get the best value now and in the future, quickly send debts to the Attorney General for collection when needed, keep losses as small as possible, make sure offers are fairly competed and treated, and have an independent appraiser value the assets.

Full Legal Text

Title 46, §53722

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(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 5, 2026

Release point: 119-73not60