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B-210998 1 (1983-06-22)

handle is hein.gao/gaobadlds0001 and id is 1 raw text is: A. I- I '?7 . I THE COMPTROLLER GENERAL OECISION 2F THE UNITED STATES WASHtNGTON, 0..C. 20548 FILE: B-210998 DATE: June 22,- 1983 MATTER OF: Economic Development Administration - Compromise Authority DIGEST:The Economic Development Administration (EDA) has the authority to sell defaulted loans to borrowers for less than the un- paid indebtedness. EDA's authority under 42 U.S.C. S 3211(4) and 19 U.S.C. S 2347(b)(2) to compromise loans allows it to accept from the borrower less than the outstanding indebtedness in complete satisfaction of EDA's claim, if EDA deter- mines it is in the Government's interest to do so because of some doubt as to the borrower's liability or the collectibility of the full amount of the loan. However, it is not required to do so if it deter- mines that allowing borrowers to bid on their own obligations would interfere with the integrity of the loan collection process or for other valid reasons. This decision is irv response to a request from the General Counsel of the Department of Commerce for our legal opinion as to whether the Economic Development Administra- tion (EDA) has the statutory authority to sell defaulted loans at a discount to the borrower or someone acting on the borrower's behalf. For the reasons set forth hereafter, it is our view that EDA does have the authority to sell these obligations to the borrowers for less than the unpaid indebtedness. However, EDA is not legally required to do so if it determines that allowing borrowers to bid on their own obligations would interfere with the integrity of the loan collection process, or would otherwise be undesirable. Under the authority of the Public Works and Economic Development Act of 1965, as amended (PWEDA), 42 U.S.C. SS 3121-3246, and Title II of the Trade Act of 1974, as amended, 19 U.S.C. §§ 2341-2374, EDA makes or guarantees loans to eligible borrowers. When a borrower has defaulted on one of these loans, one of the options that EDA has sometimes used in attempting to collect is a private sale or transfer of its interest in the defaulted loan to a third 0 PSti 73

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