REQUIRED ACTIONS UPON DEFAULT.

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.”.