Home Builders Look Forward to Getting Construction Loans for New Home Projects as New Bipartisan Bill Introduced in Congress
A new bill is making its way through the House of Representatives right now that may meet with success up in Congress since it's a bipartisan effort: introduced yesterday, HR 1255 just may become law this year. (An identical version of this proposal failed to become law as HR1755 last year.)
Home Construction Lending Regulatory Improvement Act of 2013
Which is good news for home builders around the country, because the proposed "The Home Construction Lending Regulatory Improvement Act of 2013" aims to help home builders get credit for their residential developments.
What will HR 1255 do?
Right now, federal regulations are seen as thwarting home builders in their efforts to get financing to go forward with new projects. As a result, in March 2013 we have a small number of new homes to offer buyers while builders are not able to get new construction loans to build more new houses because banks cannot loan them money.
If passed, this new law means American home builders would be able to get credit in order to build their projects much easier than they can right now. How? Among other things:
- The new law would free qualified lenders with real estate loans making up 100% of their capital to make new real estate loans to home builders.
- It would end the ability of the federal government to block a home builder from getting a loan on a project from a qualified lender.
- It would block federal agencies from forcing a lender to call in a home builder's real estate loan if it's in good standing.
- If the collateral on a builder's loan has lost value, a builder in good standing on its loan would be able to work with the lender to maximize the situation through workouts, etc.
The National Association of Home Builders issued a release yesterday applauding this proposed law. From the NAHB:
“We commend Reps. Miller and McCarthy for acting to remove a major impediment to the housing recovery by promoting legislation that will enable home builders to obtain construction loans in order to put construction crews back to work and to meet rising demand across much of the nation for new homes,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C.
You can read the full text of HR 1255 online soon (it was not available today), as well as track its progress through the House and Senate.