Legislation Targets AD&C Issues
NAHB leaders are supporting legislation introduced last week that would help alleviate a severe lack of credit for acquisition, development and construction financing.
HR 5409, introduced last week by Reps. Brad Miller, D-N.C., Carolyn Maloney, D-N.Y., and Joe Baca, D-Calif., could help with AD&C issues that threaten to put an end to the housing recovery before it has taken hold, NAHB leaders said.
The legislation, known as the Residential Construction Lending Act, would create a new residential construction loan guarantee program within the Department of Treasury to provide loans to builders with viable construction projects. Designed to unfreeze credit for small homebuilding firms, the measure would expand the flow of credit to residential builders on competitive terms.
"We applaud these lawmakers for taking the lead to address the housing production credit crisis that is jeopardizing the housing and economic recovery now under way,” said NAHB Chairman Bob Jones.
Many lenders have been refusing to make loans for viable housing projects under pressure from their bank examiners to reduce their exposure to development and construction loans to builders and curtail their outstanding portfolios of real estate loans. This is resulting in unnecessary foreclosures and losses on these loans, NAHB said in a press release.
Performing loans are also being reappraised, reducing the value of the collateral and forcing borrowers to come up with large amounts of cash to keep their loans current, NAHB said.
“HR 5409 will help restore the flow of credit to housing, provide jobs and give a meaningful lift to the economy,” said Jones. “We urge Congress to act quickly on this bill.”
