46 U.S.C. § 53710 — Contents of obligations

(a) In General. A guaranteed obligation must: (1) set out payments by the obligor that satisfy the Secretary or Administrator; (2) carry an interest rate (not counting fees) no higher than what the Secretary or Administrator decides is reasonable, based on prevailing private-market rates for similar loans and the risk taken on; (3) have a maturity date the Secretary or Administrator accepts, but no more than (A) 25 years after the vessel's delivery, or (B) if the vessel was rebuilt or reconditioned, the later of 25 years after delivery or however many years of useful life the Secretary or Administrator says remain; and (4) require, directly or through a related agreement, that if the vessel securing the guarantee has already been delivered, it must be (A) rated class A-1 by the American Bureau of Shipping (or meet other standards the Secretary or Administrator accepts), hold all required certificates including Coast Guard marine inspection certificates, and have completed all outstanding class-related requirements (unless repairs are allowed to be deferred); (B) well equipped, in good repair, and fully seaworthy and fit for service; and (C) documented under U.S. law for as long as the guarantee lasts or until the obligation is fully paid, whichever comes first. (b) Provisions for Certain Passenger Vessels. (1) With the Administrator's approval, if the securing vessel is a passenger vessel with the tonnage, speed, and accommodations described in section 503 of the Merchant Marine Act, 1936, the obligation or a related agreement may say that (A) the government's only recourse for a guarantee payment is repossessing the vessel and taking its insurance claims; and (B) the obligor's liability ends once the vessel and all interest in it are surrendered to the government in the condition described in (2). (2)(A) On surrender, the vessel must be (i) free of all liens except the Administrator's security interest under this chapter; (ii) in class; and (iii) in as good condition, normal wear excepted, as when the obligor got it. (B) Any shortfall covered by insurance may be made up by assigning the obligor's insurance claims to the government. (c) Other Provisions To Protect Security Interests and Provide for the Financial Stability of the Obligor. A guaranteed obligation and any related agreement must include other provisions protecting the government's security interests and the obligor's financial stability, including: (1) provisions on acceleration, assumption, and subrogation, the obligor issuing notes to the Secretary or Administrator, liens and lien releases, and paying taxes; and (2) any other provisions the Secretary or Administrator requires.