TERMS AND CONDITIONS.

SEC. 8743. TERMS AND CONDITIONS. Section 1422 of the Better Utilization of Investments Leading to Development Act of 2018 (22 U.S.C. 9622) is amended— (1) in subsection (b), by striking paragraph (3) and inserting the following: “(3) The Corporation shall, with respect to providing any loan guaranty to a project, require the parties to the project to bear a risk of loss on the project in an amount equal to at least 20 percent of the amount of such guaranty. The Corporation shall continue to work with the President to streamline the process for securing waivers that would enable the Corporation to guarantee up to 100 percent of the amount of a loan, provided that risk of loss in the project borne by the parties to the project is equal to at least 20 percent of the guaranty amount.” ; and (2) by adding at the end the following new subsection: “(c) Best Practices to Prevent Usurious or Abusive Lending by Intermediaries.— “(1) In general.—The Corporation shall ensure that terms, conditions, penalties, rules for collections practices, and other finance administration policies that govern Corporation-backed lending, guarantees and other financial instruments through intermediaries are consistent with industry best practices and the Corporation’s rules with respect to direct lending to its clients. “(2) Truth in lending policies.—The Corporation shall develop required truth in lending rules, guidelines, and related implementing policies and practices to govern secondary lending through intermediaries and shall report such policies and practices to the appropriate committees not later than 180 days of enactment of the DFC Modernization and Reauthorization Act of 2025, with annual updates, as needed, thereafter. “(3) Policy development requirements.—In developing such policies and practices required by paragraph (2), the Corporation shall— “(A) take into account any particular vulnerabilities generally faced by potential applicants or recipients of microlending and other forms of microfinance, such as lack of experience with lending or lack of financial literacy; “(B) develop and apply, generally, rules and terms to ensure Corporation-backed lending through an intermediary does not carry excessively punitive or disproportionate penalties for customers in default; “(C) ensure that such policies and practices include effective safeguards to prevent usurious or abusive lending by intermediaries, including in the provision of microfinance; and “(D) ensure the intermediary includes in any lending contract with microfinance borrowers that is supported by the Corporation an appropriate level of financial disclosure to the borrower, including— “(i) disclosures that explain in all material respects to the customer both lender and customer rights and obligations under the contract in language that is accessible to the customer; “(ii) the material loan terms and tenure of the contract; “(iii) the procedures and potential penalties or forfeitures in case of default; “(iv) information on privacy and personal data protection; and “(v) any other information that the Corporation determines is needed to inform the borrower of the material terms of the loan. “(4) Audit requirements.—The Corporation shall establish appropriate auditing mechanisms to oversee and monitor secondary lending provided through intermediaries in partner countries and include in each annual report to Congress required under paragraph (2) a summary of the results of such audits.” .