§ 661a. — Definitions.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 2USC661a]
TITLE 2--THE CONGRESS
CHAPTER 17A--CONGRESSIONAL BUDGET AND FISCAL OPERATIONS
SUBCHAPTER III--CREDIT REFORM
Sec. 661a. Definitions
For purposes of this subchapter--
(1) The term ``direct loan'' means a disbursement of funds by
the Government to a non-Federal borrower under a contract that
requires the repayment of such funds with or without interest. The
term includes the purchase of, or participation in, a loan made by
another lender and financing arrangements that defer payment for
more than 90 days, including the sale of a government \1\ asset on
credit terms. The term does not include the acquisition of a
federally guaranteed loan in satisfaction of default claims or the
price support loans of the Commodity Credit Corporation.
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\1\ So in original. Probably should be capitalized.
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(2) The term ``direct loan obligation'' means a binding
agreement by a Federal agency to make a direct loan when specified
conditions are fulfilled by the borrower.
(3) The term ``loan guarantee'' means any guarantee, insurance,
or other pledge with respect to the payment of all or a part of the
principal or interest on any debt obligation of a non-Federal
borrower to a non-Federal lender, but does not include the insurance
of deposits, shares, or other withdrawable accounts in financial
institutions.
(4) The term ``loan guarantee commitment'' means a binding
agreement by a Federal agency to make a loan guarantee when
specified conditions are fulfilled by the borrower, the lender, or
any other party to the guarantee agreement.
(5)(A) The term ``cost'' means the estimated long-term cost to
the Government of a direct loan or loan guarantee or modification
thereof, calculated on a net present value basis, excluding
administrative costs and any incidental effects on governmental
receipts or outlays.
(B) The cost of a direct loan shall be the net present value, at
the time when the direct loan is disbursed, of the following
estimated cash flows:
(i) loan disbursements;
(ii) repayments of principal; and
(iii) payments of interest and other payments by or to the
Government over the life of the loan after adjusting for
estimated defaults, prepayments, fees, penalties, and other
recoveries;
including the effects of changes in loan terms resulting from the
exercise by the borrower of an option included in the loan contract.
(C) The cost of a loan guarantee shall be the net present value,
at the time when the guaranteed loan is disbursed, of the following
estimated cash flows:
(i) payments by the Government to cover defaults and
delinquencies, interest subsidies, or other payments; and
(ii) payments to the Government including origination and
other fees, penalties and recoveries;
including the effects of changes in loan terms resulting from the
exercise by the guaranteed lender of an option included in the loan
guarantee contract, or by the borrower of an option included in the
guaranteed loan contract.
(D) The cost of a modification is the difference between the
current estimate of the net present value of the remaining cash
flows under the terms of a direct loan or loan guarantee contract,
and the current estimate of the net present value of the remaining
cash flows under the terms of the contract, as modified.
(E) In estimating net present values, the discount rate shall be
the average interest rate on marketable Treasury securities of
similar maturity to the cash flows of the direct loan or loan
guarantee for which the estimate is being made.
(F) When funds are obligated for a direct loan or loan
guarantee, the estimated cost shall be based on the current
assumptions, adjusted to incorporate the terms of the loan contract,
for the fiscal year in which the funds are obligated.
(6) The term ``credit program account'' means the budget account
into which an appropriation to cover the cost of a direct loan or
loan guarantee program is made and from which such cost is disbursed
to the financing account.
(7) The term ``financing account'' means the non-budget account
or accounts associated with each credit program account which holds
balances, receives the cost payment from the credit program account,
and also includes all other cash flows to and from the Government
resulting from direct loan obligations or loan guarantee commitments
made on or after October 1, 1991.
(8) The term ``liquidating account'' means the budget account
that includes all cash flows to and from the Government resulting
from direct loan obligations or loan guarantee commitments made
prior to October 1, 1991.
These accounts shall be shown in the budget on a cash basis.
(9) The term ``modification'' means any Government action that
alters the estimated cost of an outstanding direct loan (or direct
loan obligation) or an outstanding loan guarantee (or loan guarantee
commitment) from the current estimate of cash flows. This includes
the sale of loan assets, with or without recourse, and the purchase
of guaranteed loans. This also includes any action resulting from
new legislation, or from the exercise of administrative discretion
under existing law, that directly or indirectly alters the estimated
cost of outstanding direct loans (or direct loan obligations) or
loan guarantees (or loan guarantee commitments) such as a change in
collection procedures.
(10) The term ``current'' has the same meaning as in section
900(c)(9) of this title.
(11) The term ``Director'' means the Director of the Office of
Management and Budget.
(Pub. L. 93-344, title V, Sec. 502, as added Pub. L. 101-508, title
XIII, Sec. 13201(a), Nov. 5, 1990, 104 Stat. 1388-610; amended Pub. L.
105-33, title X, Sec. 10117(a), Aug. 5, 1997, 111 Stat. 692.)
Prior Provisions
A prior section 502 of Pub. L. 93-344, title V, July 12, 1974, 88
Stat. 321, was set out as a note under section 1020 of former Title 31,
prior to repeal by Pub. L. 97-258, Sec. 5(b), Sept. 13, 1982, 96 Stat.
1068.
Amendments
1997--Par. (1). Pub. L. 105-33, Sec. 10117(a)(1), inserted ``and
financing arrangements that defer payment for more than 90 days,
including the sale of a government asset on credit terms'' after
``another lender''.
Par. (5)(A). Pub. L. 105-33, Sec. 10117(a)(2), inserted ``or
modification thereof'' after ``or loan guarantee''.
Par. (5)(B), (C). Pub. L. 105-33, Sec. 10117(a)(3), added subpars.
(B) and (C) and struck out former subpars. (B) and (C) which read as
follows:
``(B) The cost of a direct loan shall be the net present value, at
the time when the direct loan is disbursed, of the following cash flows:
``(i) loan disbursements;
``(ii) repayments of principal; and
``(iii) payments of interest and other payments by or to the
Government over the life of the loan after adjusting for estimated
defaults, prepayments, fees, penalties and other recoveries.
``(C) The cost of a loan guarantee shall be the net present value
when a guaranteed loan is disbursed of the cash flow from--
``(i) estimated payments by the Government to cover defaults and
delinquencies, interest subsidies, or other payments, and
``(ii) the estimated payments to the Government including
origination and other fees, penalties and recoveries.''
Par. (5)(D). Pub. L. 105-33, Sec. 10117(a)(4), amended subpar. (D)
generally. Prior to amendment, subpar. (D) read as follows: ``Any
Government action that alters the estimated net present value of an
outstanding direct loan or loan guarantee (except modifications within
the terms of existing contracts or through other existing authorities)
shall be counted as a change in the cost of that direct loan or loan
guarantee. The calculation of such changes shall be based on the
estimated present value of the direct loan or loan guarantee at the time
of modification.''
Par. (5)(E). Pub. L. 105-33, Sec. 10117(a)(5), inserted ``the cash
flows of'' after ``similar maturity to''.
Par. (5)(F). Pub. L. 105-33, Sec. 10117(a)(6), added subpar. (F).
Pars. (9) to (11). Pub. L. 105-33, Sec. 10117(a)(7), added pars. (9)
and (10) and redesignated former par. (9) as (11).
Section Referred to in Other Sections
This section is referred to in section 661d of this title; title 10
sections 2540d, 2873; title 12 sections 635i-5, 1701z-11, 1715l, 1715z-
1, 1715z-13a, 1715z-13b, 1721, 1735f-20, 4707; title 14 section 682;
title 15 sections 636, 683, 697; title 22 sections 290m-2, 2151f, 2152b,
2431d, 2431e, 2431f; title 25 section 4195; title 31 section 3711; title
42 section 1490p-2; title 46 App. sections 1273, 1279e; title 47
sections 1103, 1109.
