Construction Loans Made Easier



Even as the housing recovery picks up steam, many home builders across the nation still struggle to catch up with the market because they are unable to obtain acquisition, development and construction (AD&C) loans for viable home building projects. NAHB is working hard on behalf of members to ease tight credit conditions and clearly the message is resonating with our elected officials.

At NAHB’s urging, Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.) recently introduced bipartisan legislation that would discourage lenders from calling construction loans where payments are current and would establish regulatory guidelines to allow the banking industry to restore lending for viable home building projects.

Introduced on May 21, the Home Building Lending Improvement Act of 2013 (S.1002) is very similar to NAHB-supported legislation to resolve the ongoing credit problems for home builders that was introduced earlier this year in the House by Reps. Gary Miller (R-Calif.) and Carolyn McCarthy (D-N.Y.).

“With housing and the economy now on the mend, there is pent up demand for homes in many parts of the country,” said NAHB Chairman Rick Judson. “By helping to restore the flow of credit to home builders, S.1002 will help meet this growing demand, put Americans back to work and strengthen our communities by increasing the property tax base that supports local schools, teachers, police, firefighters and public services.”

Regulatory Efforts to Loosen Credit Spigot

Since the earliest days of the housing downturn, NAHB has worked very closely with lawmakers and regulators to improve the availability of credit for home builders.

In recent months, NAHB’s leadership has raised concerns on AD&C credit in meetings with Federal Reserve Chairman Ben Bernanke, Consumer Financial Protection Bureau Director Richard Cordray, Comptroller of the Currency Thomas Curry and Federal Housing Finance Agency Director Edward DeMarco.

NAHB has also sent letters to federal regulators and spoken with members of Congress concerning proposed Basel III capital regulatory rules that would significantly increase the amount of capital banks would have to hold in their reserves. NAHB told policymakers that this would impose onerous capital requirements on community banks, which would exacerbate tight lending conditions for small businesses, including home building firms.

Additionally, the NAHB Housing Capital Working Group has explored several possible funding mechanisms to help members seeking funds through non-traditional sources such as private equity and fixed-income or bond funds.

NAHB has also identified several companies that are offering financing to builders, and has listed them on a members-only web page along with a list of financial advisors with expertise in advising builders on obtaining alternative sources of financing. You can find it at

The working group has also looked at ways to combine alternative capital sources with bank financing, and has developed a web-based toolkit for people seeking AD&C funds from local investors such as family, friends and other high net worth individual investors. That toolkit is now available at

More information to help NAHB members find AD&C financing and ways to work out financing problems with a lender, along with other useful resources to help address credit issues, can be found at