[Code of Federal Regulations]
[Title 25, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 25CFR103.15]

[Page 307-308]
 
                            TITLE 25--INDIANS
 
     CHAPTER I--BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR
 
PART 103--LOAN GUARANTY, INSURANCE, AND INTEREST SUBSIDY--Table of Contents
 
  Subpart B--How a Lender Obtains a Loan Guaranty or Insurance Coverage
 
Sec. 103.15  Are there any prohibited loan terms?

    A loan agreement guaranteed or insured under the Program may not 
contain:
    (a) Charges by the lender styled as ``points,'' loan origination 
fees, or any similar fees (however named), except that if authorized in 
the loan agreement, the lender may charge the borrower a reasonable 
annual loan servicing fee that:
    (1) Is not included as part of the loan principal; and
    (2) Does not bear interest;
    (b) Charges of any kind by the lender or by any third party except 
for the reasonable and customary cost of legal and architectural 
services, broker commissions, surveys, compliance inspections, title 
inspection and/or insurance, lien searches, appraisals, recording costs, 
premiums for required hazard, liability, key man life, and other kinds 
of insurance, and such other charges as BIA may approve in writing;
    (c) A loan repayment term of over 30 years;
    (d) Payments scheduled less frequently than annually;
    (e) A prepayment penalty, unless the terms of the penalty are 
clearly specified in BIA's loan guaranty or loan insurance conditions;
    (f) An interest rate greater than what BIA considers reasonable, 
taking into account the range of rates prevailing in the private market 
for similar loans;
    (g) A variable interest rate, unless the rate is tied to a specific 
prime rate

[[Page 308]]

published from time to time by a nationally recognized financial 
institution or news source;
    (h) An increased rate of interest based on default;
    (i) A fee imposed for the late repayment of any installment due, 
except for a late fee that:
    (1) Is imposed only after the borrower is at least 30 days late with 
payment;
    (2) Does not bear interest; and
    (3) Equals no more than 5 percent of the late installment;
    (j) An ``insecurity'' clause, or any similar provision permitting 
the lender to declare a loan default solely on the basis of its 
subjective view of the borrower's changed repayment prospects;
    (k) A requirement that the borrower take title to any real or 
personal property purchased with loan proceeds by a title instrument 
containing restrictions on alienation, control or use of the property, 
unless otherwise required by applicable law; or
    (l) A requirement that a borrower which is a tribe provide as 
security a general assignment of the tribe's trust income. If otherwise 
lawful, a tribe may provide as loan security an assignment of trust 
income from a specific source.