Representatives Gary Miller (R-CA) and Carolyn McCarthy (D-NY) have introduced legislation to increase the access of homebuilders to credit.  HR 1255, The Home Construction Lending Regulatory Improvement Act of 2013, addresses specific regulatory obstacles to the credit needed by builders for home building projects. 

The text of the bill introduced on Tuesday is not yet available through the Library of Congress but is said to be identical to HR 1755 introduced by Miller in the 112^th Congress.  That bill required the appropriate federal banking agencies to coordinate rulemaking for banks that make real estate loans to home builders.  Its provisions would:

• Eliminate the 100 Percent of Bank Capital Measurement so that regulators could no longer prohibit a qualified financial institution that holds real estate loans representing 100 percent of more of its total capital from continuing to make such loans to home builders.
• No longer allow federal banking agencies keep a qualified financial institution from making a real estate loan to a home builder for a viable project.
• Requires appraisers valuing collateral for a real estate loans associated with any viable project to use an "as completed" valuation and use comparable sales involving arms length transactions.
• Prohibits federal banking agencies from compelling a financial institution from calling or curtailing a real estate loan of a home builder that is in good standing.
• In general, where a home builder is in good standing on a real estate loan but the collateral for that loan has decreased in value, the appropriate federal agency should permit a financial institution to work with such home builder to realize the maximum current market valuation of such collateral using workout methods or other appropriate means.
• In no case shall any real estate loan be required to be charged off until the financial institution holding such loan has worked in good faith to exhaust all workout methods or other appropriate means.
• The appropriate Federal banking agency shall not require a financial institution to reclassify any real estate loan in this paragraph on such institution's balance sheet, unless there is a significant reason under Financial Accounting Standards Board Accounting Standards.

The National Association of Homebuilders (NAHB) issued a statement regarding the Miller/McCarthy Bill.  Rick Judson, chairman of NAHB said, "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. 

The NAHB statement noted that in many housing markets demand is increasing and new home inventories are near record lows but builders cannot obtain construction loans.  "As a result, jobs are being lost and home builders are unable to meet the needs of home buyers in scores of local markets whose economies are on the mend," said Judson.  This is also placing an additional burden on cash-strapped state and local governments that rely on a robust property tax base to fund essential services, including schools, police and firefighters. Constructing 100 new homes creates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenue, NAHB said.