PUBLIC LAW 104-208—SEPT. 30, 1996 110 STAT. 3009-736
that term is defined in section 502 of the Federal Credit Reform
Act of 1990) to the Administration of purchasing and guaranteeing
debentures under this Act.".
SEC. 203. REQUIRED ACTIONS UPON DEFAULT.
Section 503 (15 U.S.C. 697) is amended by adding at the end
the following new subsection:
"(h) REQUIRED ACTIONS UPON DEFAULT.—
"(1) INITIAL ACTIONS.— Not later than the 45th day after
the date on which a payment on a loan funded through a
debenture guaranteed under this section is due and not
received, the Administration shall—
"(A) take all necessary steps to bring such a loan
current; or
"(B) implement a formal written deferral agreement.
"(2) PURCHASE OR ACCELERATION OF DEBENTURE.—Not later
than the 65th day after the date on which a payment on
a loan described in paragraph (1) is due and not received,
and absent a formal written deferral agreement, the administration shall take all necessary steps to purchase or accelerate
the debenture.
"(3) PREPAYMENT PENALTIES. —With respect to the portion
of any project derived from funds set forth in section 502(3),
the Administration—
"(A) shall negotiate the elimination of any prepayment
penalties or late fees on defaulted loans made prior to
September 30, 1996;
"(B) shall not pay any prepayment penalty or late
fee on the default based purchase of loans issued after
September 30, 1996; and
"(C) for any project financed after September 30, 1996,
shall not pay any default interest rate higher than the
interest rate on the note prior to the date of default.".
SEC. 204. LOAN LIQUIDATION PILOT PROGRAM.
15 USC 695 note.
(a) IN GENERAL. —The Administrator shall carry out a loan
liquidation pilot program (in this section referred to as the "pilot
program") in accordance with the requirements of this section.
(b) SELECTION OF DEVELOPMENT COMPANIES.—
(1) IN GENERAL.— Not later than 90 days after the date
of the enactment of this Act, the Administrator shall establish
a pilot program under which certain development companies
authorized to make loans and issue debentures under title
V of the Small Business Investment Act of 1958 are selected
by the Administrator in accordance with this subsection to
carry out loan liquidations.
(2) CONFLICTS OF INTEREST. —The development companies
selected under paragraph (1) shall agree not to take any action
that would create a potential conflict of interest involving the
development company, the third party lender, or an associate
of the third party lender.
(3) QUALIFICATIONS.— In order to qualify to participate in
the pilot program under this section, each development company shall—
(A) have not less than 6 years of experience in the
program established by title V of the Small Business Investment Act of 1958;
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