§53712. Monitoring financial condition and operations of obligor

(a) In General.-The Secretary shall monitor the financial condition and operations of the obligor on a regular basis during the term of the guarantee. The Secretary shall document the results of the monitoring on an annual or quarterly basis depending on the condition of the obligor. If the Secretary determines that the financial condition of the obligor warrants additional protections to the Secretary, the Secretary shall take appropriate action under subsection (b). If the Secretary determines that the financial condition of the obligor jeopardizes its continued ability to perform its responsibilities in connection with the guarantee of an obligation by the Secretary, the Secretary shall make an immediate determination whether default should take place and whether further measures described in subsection (b) should be taken to protect the interests of the Secretary while ensuring that program objectives are met.

(b) Contract Provisions To Protect Secretary.-The Secretary shall include provisions in a loan agreement with an obligor that provides additional authority to the Secretary to take action to limit potential losses in connection with a defaulted loan or a loan that is in jeopardy due to the deteriorating financial condition of the obligor. These provisions include requirements for additional collateral or greater equity contributions that are effective upon the occurrence of verifiable conditions relating to the obligor's financial condition or the status of the vessel or shipyard project.

( Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1612 ; Pub. L. 109–163, div. C, title XXXV, §3507(a)(1)(D), (b)(6), Jan. 6, 2006, 119 Stat. 3555 , 3556.)

Amendments Not Shown in Text

This section was derived from subsecs. (k) and (m) of section 1274 of the former Appendix to this title, which were amended by Pub. L. 109–163, div. C, title XXXV, §3507(a)(1)(D), (b)(6), Jan. 6, 2006, 119 Stat. 3555 , 3556. For applicability of those amendments to this section, see section 18(a) of Pub. L. 109–304, set out as a Legislative Purpose and Construction note preceding section 101 of this title. Subsecs. (k) and (m) of section 1274 of the former Appendix to this title were amended by striking "Secretary" each place it appears and inserting "Secretary or Administrator", and subsec. (m) was further amended by striking the last sentence [now the last sentence of subsec. (b) of this section] and inserting "If the Secretary or Administrator has waived a requirement under subsection (d) of this section [now sections 53707(d), 53708(a) to (c), and 53732(c)(1) and (d) of this title], the loan agreement shall include requirements for additional payments, collateral, or equity contributions to meet such waived requirement upon the occurrence of verifiable conditions indicating that the obligor's financial condition enables the obligor to meet the waived requirement."