HR 5409 IHCommentsClose CommentsPermalink

To establish the Residential Construction Loan Guarantee Program to guarantee loans made to eligible home building companies for viable building projects.CommentsClose CommentsPermalink

May 26, 2010CommentsClose CommentsPermalink

Mr. MILLER of North Carolina (for himself, Mr. BACA, and Mrs. MALONEY) introduced the following bill; which was referred to the Committee on Financial ServicesCommentsClose CommentsPermalink

To establish the Residential Construction Loan Guarantee Program to guarantee loans made to eligible home building companies for viable building projects.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Residential Construction Lending Act’.CommentsClose CommentsPermalink

SEC. 2. RESIDENTIAL CONSTRUCTION LOAN GUARANTEE PROGRAM.

(a) Establishment- There is established within the Department of the Treasury a program to be known as the ‘Residential Construction Loan Guarantee Program’ (hereinafter referred to in this section as the ‘Loan Guarantee Program’).CommentsClose CommentsPermalink





(b) Loan Guarantee Program-CommentsClose CommentsPermalink





(1) PURPOSE- The purpose of the Loan Guarantee Program is to guarantee loans made to eligible home building companies for viable building projects.CommentsClose CommentsPermalink





(2) APPLICATION- An insured depository institution that wishes to make loans that are guaranteed under the Loan Guarantee Program may submit an application to the Secretary in such form and manner and containing such information as the Secretary may require.CommentsClose CommentsPermalink





(3) SELECTION CRITERIA-CommentsClose CommentsPermalink





(A) IN GENERAL- The Secretary shall approve any insured depository institution submitting a full and complete application under paragraph (2) for participation in the Loan Guarantee Program, and shall guarantee loans on a first-come-first-served basis.CommentsClose CommentsPermalink





(B) SUBMISSION OF LOANS- Insured depository institutions approved for participation in the Loan Guarantee Program shall submit each loan made by such institution as part of the Loan Guarantee Program to the Secretary so the Secretary may confirm that such loan complies with the requirements of this section.CommentsClose CommentsPermalink





(4) OVERSIGHT-CommentsClose CommentsPermalink





(A) LOAN TERMS- Not later than 7 days after a loan guaranteed under the Loan Guarantee Program is originated, the insured depository institution making such loan shall submit all information about the terms and conditions of such loan to the Secretary.CommentsClose CommentsPermalink





(B) SUSPENSION AND TERMINATION AUTHORITY- Notwithstanding paragraph (3), the Secretary shall, not less than yearly, review all of the loans made by each insured depository institution that are guaranteed under the Loan Guarantee Program, and may suspend or terminate any insured depository institution’s future participation in the Loan Guarantee Program if the Secretary finds that such institution has engaged in fraud or abuse with respect to the Loan Guarantee Program, or has consistently made loans guaranteed under the Loan Guarantee Program that are not repaid by the borrower in accordance with the terms of the loan.CommentsClose CommentsPermalink





(5) LOAN ELIGIBILITY- A loan may only be guaranteed under the Loan Guarantee Program if it meets the following criteria:CommentsClose CommentsPermalink





(A) VIABLE BUILDING PROJECT- The loan must be made for a viable building project, as determined by the Secretary. In making such determination, the Secretary shall consider housing demand, local government support, percentage of workforce, and speculative units.CommentsClose CommentsPermalink





(B) ELIGIBLE HOME BUILDING COMPANY- The loan must be made to an eligible home building company, as determined by the Secretary. In making such determination, the Secretary shall consider whether such company is creditworthy, reputable, and has a record of successful residential building projects.CommentsClose CommentsPermalink





(C) LOAN GUARANTEE AMOUNT LIMITATION- The eligible home building company, or its principals, must have a minimum net worth equal to the loan amount to be guaranteed.CommentsClose CommentsPermalink





(D) USE OF LOAN- The loan may only be used for the acquisition, development, and construction of residential developments that have locally approved development plans and that create immediate job opportunities.CommentsClose CommentsPermalink





(E) TERM REQUIREMENTS-CommentsClose CommentsPermalink





(i) IN GENERAL- The term of the loan shall be for no more than 5 years, but may have an option to extend.CommentsClose CommentsPermalink





(ii) LOAN AMOUNT LIMITATIONS- The loan shall be for an amount not to exceed--CommentsClose CommentsPermalink





(I) 75 percent loan-to-value on the land;CommentsClose CommentsPermalink





(II) 100 percent for construction and development costs; andCommentsClose CommentsPermalink





(III) 80 percent of the market value of the building project.CommentsClose CommentsPermalink





(F) INTEREST RATES- Notwithstanding the provisions of the constitution of any State or the laws of any State limiting the rate or amount of interest which may be charged, taken, received, or reserved, the maximum legal rate of interest on the loan may not substantively differ from the current average market yield on outstanding marketable obligations of similar privately held loans with remaining periods to maturity comparable to such loan.CommentsClose CommentsPermalink





(6) MULTIPLE GUARANTEES PERMITTED; AGGREGATE DOLLAR AMOUNT LIMITATION- A single eligible home building company is permitted to have more than one loan guaranteed under the Loan Guarantee Program, but the aggregate amount of all such loans guaranteed for a single eligible home building company may not exceed the net worth of such company. The Secretary may exempt an eligible home building company from the net worth limitation of this paragraph if the Secretary determines doing so will advance the purpose of this Loan Guarantee Program.CommentsClose CommentsPermalink





(7) GOVERNMENT GUARANTEE-CommentsClose CommentsPermalink





(A) LEVEL OF PARTICIPATION- Loans guaranteed under the Loan Guarantee Program shall be guaranteed at 80 percent of the loan amount.CommentsClose CommentsPermalink





(B) PAYMENT OF ACCRUED INTEREST-CommentsClose CommentsPermalink





(i) IN GENERAL- Any insured depository institution making a claim for payment on the guaranteed portion of a loan guaranteed under the Loan Guarantee Program shall be paid the accrued interest due on the loan from the earliest date of default to the date of payment of the claim at a rate not to exceed the rate of interest on the loan on the date of default, minus one percent.CommentsClose CommentsPermalink





(ii) LOANS SOLD ON SECONDARY MARKET- If a loan described under clause (i) is sold on the secondary market, the amount of interest paid to an insured depository institution described in that clause from the earliest date of default to the date of payment of the claim shall be no more than the agreed upon rate, minus one percent.CommentsClose CommentsPermalink





(iii) INTEREST RATE- The rate of interest to be paid on a claim for payment on the guaranteed portion of a loan guaranteed under the Loan Guarantee Program shall be established commensurate with Federal Housing Administration rates, based on safety and soundness.CommentsClose CommentsPermalink





(8) ONE-THIRD OF GUARANTEES TO BE MADE IN AREAS WITH GREATEST UNMET NEED- Notwithstanding any other provision of this section, not less than one-third of the funds made available under this section to guarantee loans shall be used to guaranteed loans in areas of the United States that have the greatest unmet need for residential construction financing, as determined by the Secretary.CommentsClose CommentsPermalink





(9) REGULATIONS- The Secretary shall promulgate any regulations needed to carry out this section through a notice and public comment period of not more than 60 days.CommentsClose CommentsPermalink





(c) Definitions- For purposes of this section:CommentsClose CommentsPermalink





(1) INSURED DEPOSITORY INSTITUTION- The term ‘insured depository institution’ has the meaning given such term under section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2)).CommentsClose CommentsPermalink





(2) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.CommentsClose CommentsPermalink





(d) Authorization of Appropriations- There are authorized to be appropriated to the Secretary $15,000,000,000 to carry out this section.CommentsClose CommentsPermalink





(e) Termination of Authority- The Secretary’s authority to make new loan guarantees under the Loan Guarantee Program shall terminate after the 3-year period beginning on the date of the enactment of this section.CommentsClose CommentsPermalink