[Code of Federal Regulations]
[Title 49, Volume 4]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR260.15]

[Page 704-705]
 
                        TITLE 49--TRANSPORTATION
 
       CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF 
                             TRANSPORTATION
 
PART 260--REGULATIONS GOVERNING LOANS AND LOAN GUARANTEES UNDER THE RAILROAD REHABILITATION AND IMPROVEMENT FINANCING PROGRAM--Table of Contents
 
                           Subpart A--Overview
 
Sec. 260.15  Credit risk premium.

    (a) Where available Federal appropriations are inadequate to cover 
the subsidy cost, a non-Federal infrastructure partner may pay to the 
Administrator a Credit Risk Premium adequate to cover that portion of 
the subsidy

[[Page 705]]

cost not covered by Federal appropriations. Where there is no Federal 
appropriation, the Credit Risk Premium must cover the entire subsidy 
cost.
    (b) The amount of the Credit Risk Premium required for each direct 
loan or loan guarantee, if any, shall be established by the 
Administrator. The Credit Risk Premium shall be determined based on the 
credit risk and anticipated recovery in the event of default, including 
the recovery of collateral.
    (c) The Credit Risk Premium must be paid before the disbursement of 
a direct or guaranteed loan. Where the borrower draws down the direct or 
guaranteed loan in several increments, the borrower may pay a portion of 
the total Credit Risk Premium for each increment equal to the proportion 
of that increment to the total amount of the direct or guaranteed loan.
    (d) Each direct loan and loan guarantee made by the Administrator 
will be included in one cohort of direct loans or one cohort of loan 
guarantees, respectively, made during that same fiscal year, or longer 
period, as may be determined by the Administrator. When all obligations 
in a cohort have been satisfied or liquidated, the amount of Credit Risk 
Premiums, paid by applicants or infrastructure partners, remaining in 
the cohort, after deductions made to mitigate losses from any loan or 
loan guarantee in the cohort, together with interest accrued thereon, 
will be repaid on a pro rata basis to each original payor of a Credit 
Risk Premium for any obligation which was fully satisfied. If the 
Administrator's estimate of the default risk cost of each loan is 
accurate, the aggregate of Credit Risk Premiums associated with each 
cohort of loans will fully offset all losses in the cohort and none will 
remain to be returned to the payees.