NAHB Backs New Bank Regulator Guidance

Guidelines that were developed years ago in regards to commercial real estate developers and the banks attempting to grant them loans have begun to backfire. As these loans and extensions of loans are being turned down, this is forcing developers to turn their property over to the bank.

Recently, the Chairman of the National Association for Home Builders came out with a statement regarding the new bank regulator guidance on real estate loans.

On behalf of National Association of Home Builders, Joe Robson stated that he strongly supports the new guidelines and what they stand to accomplish. These new guidelines were built to help protect responsible borrowers who are undergoing viable projects from facing negative consequences such as loan foreclosures. The guidelines will hopefully direct banks on renewing and restructuring loans to those who are deserving even though their loan values may have declined.

Robson feels that there is too much of a focus on income-producing commercial properties and that this will create difficulties for banks as they try to restructure AD&C loans. To improve the policy, regulators should be more flexible and open with their qualifying criteria for AD&C loans. Unless this takes place, more unnecessary foreclosures will continue. Robson says the overall effects will have a negative outcome on the housing industry and the economy.

As the economy slowly recovers we will depend greatly on improvements to the building industry such as these.