GOVERNMENT AFFAIRS


Te Industry Eye on State & Local Issues


Call to Action—AD&C


By MAGGIE YANCEY, GHBA Government Affairs and Communications Specialist


You Have a Voice with GAC!


If you have questions about this article or would like to get involved on the Government Affairs Committee, call (281) 970-8970, ext. 142 or email Maggie at myancey@ghba.org.


Department’s April 12 report, that home construction increased 7.2 percent in March from February to a seasonally adjusted 549,000 units. Additionally, the Real Estate Center at Texas A&M University reports that Texas gained 237,900 jobs, which is an annual growth rate of 2.3 percent. While it is a far cry from the boom years, they remain small but significant improvements that foreshadow a steady upswing in consumer confidence and economic health.


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Home construction increases and lower unemployment are huge factors that enhance the overall economic climate, and the apparent upswing must not be ignored. Its timeliness creates the perfect forecast for addressing the federal issues related to acquisition, development and construction financing, also known as AD&C.


For many years, builders and developers have faced an AD&C financing “crunch” due to the overreaction by banking regulators and examiners that have created blocks in home financing. The banks and regulatory agencies’ over-reaction has been exacerbated by inefficient and “bad” mortgage practices that have caused a bottleneck in securing financing for new homes. These counterproductive practices that were largely implemented to assure the safety and soundness of lending institutions have resulted in a chokehold on builders, large and small.


Upon Congress’ return after the spring Congressional recess on May 2, the National Association of Home Builders (NAHB) will be introducing the ‘Home Construction Lending Regulatory Improvement Act,’ which addresses the lack of liquidity in the AD&C loan market and allows banks to start lending again. This


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uilding in today’s economy is tough. However, this market seems ready for an upward trend! Good news comes from the U.S. Commerce


legislation directs federal banking regulators to issue new guidance specifically addressing key regulatory areas that apply to loan processing. This legislation will free lending institutions from overly restrictive regulations resulting from the recent credit crisis.


The Home Construction Lending Regulatory Improvement Act of 2011 would direct the banking regulators to issue new guidance in three key areas: „ Cease implementing a 100 percent capital bank lending limit for AD&C loans as a “hard” limit, and utilize the 100 percent of capital guideline as it was intended


„ Use “as-completed” values when assessing the collateral of residential AD&C loans they intend to fund to completion and use “arms length transactions” standards when assessing new loans


„ Abstain from compelling a lender to call or curtail AD&C loans where the home builder is current in making payments in accordance with the loan documents


The bipartisan legislation sponsored by Rep. Gary Miller (R-CA) and Rep. Brad Miller (D-NC) targets specific regulatory obstacles to credit availability for the home building industry. Without immediate congressional and regulatory action on this issue, the credit crisis facing our industry will be a major impediment to the fledgling economic recovery and a threat to the survival of many small builders.


In March during NAHB Legislative Conference, members from the GHBA brought this issue to our Houston congressional delegation and received positive responses. Now is the time to ask your lawmaker to co-sponsor the bill and help the nation's economy get back on its feet.


Continued on next page MAY 2011 | HOUSTON BUILDER | GREATER HOUSTON BUILDERS ASSOCIATION – BUILDING A BETTER FUTURE 


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