In a major step forward in making the nation’s lawmakers aware of the dire financial situation faced by most home builders, Reps. Gary Miller (R-Calif.), Brad Miller (D-N.C.) and 29 other original cosponsors on May 5 introduced NAHB-supported legislation designed to address the severe credit crunch for acquisition, development and construction (AD&C) financing.
The NAHB, National Association of Home Builders, is introducing legislation to call attention to the residential home builder’s inability to get credit to build homes. In an industry that has come to a complete standstill because of government regulation on housing starts, this attention and pressure is long overdue.
The bill would introduce measures that would ban the use of foreclosure and other distressed sales as comparables in setting collateral values in determining loan amounts for new projects and direct regulators to abstain from forcing lenders to curtail or call acquisition, development and construction loans in cases where the borrower is making payments in accordance with the original loan documents among other measures.
Builders have been coming under increased pressure from the FDIC and lenders who call for additional equity. The Banking institutions, under 2008 TARP guiddlines, have been makng a pratice of denying loan extensions and demanding immediate repayment — even when their loans are current.