Residential Construction Lending Act - Establishes within the Department of the Treasury a three-year Residential Construction Loan Guarantee Program to guarantee loans made to eligible home building companies for viable building projects.
Directs the Secretary of the Treasury to: (1) approve any insured depository institution submitting a full and complete application for participation in the Program; (2) guarantee the loans on a first-come-first-served basis; and (3) review yearly all loans made by each insured depository institution that are guaranteed under the Program.
Authorizes the Secretary to suspend or terminate any insured depository institution's future participation in the Program if that institution has engaged in fraud or abuse with respect to it, or has consistently made loans guaranteed under the Program that are not repaid by the borrower in accordance with the loan terms.
Sets forth loan eligibility criteria that include restricting loans to the acquisition, development, and construction of residential developments that have locally approved development plans and that create immediate job opportunities.
Permits multiple loan guarantees, with a federal guarantee at 80% of each loan.
Requires one-third of guarantees to be made in areas with the greatest unmet need for residential construction financing.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5409 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5409
To establish the Residential Construction Loan Guarantee Program to
guarantee loans made to eligible home building companies for viable
building projects.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 26, 2010
Mr. Miller of North Carolina (for himself, Mr. Baca, and Mrs. Maloney)
introduced the following bill; which was referred to the Committee on
Financial Services
_______________________________________________________________________
A BILL
To establish the Residential Construction Loan Guarantee Program to
guarantee loans made to eligible home building companies for viable
building projects.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Residential Construction Lending
Act''.
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'').
(b) Loan Guarantee Program.--
(1) Purpose.--The purpose of the Loan Guarantee Program is
to guarantee loans made to eligible home building companies for
viable building projects.
(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.
(3) Selection criteria.--
(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.
(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.
(4) Oversight.--
(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.
(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.
(5) Loan eligibility.--A loan may only be guaranteed under
the Loan Guarantee Program if it meets the following criteria:
(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.
(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.
(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.
(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.
(E) Term requirements.--
(i) In general.--The term of the loan shall
be for no more than 5 years, but may have an
option to extend.
(ii) Loan amount limitations.--The loan
shall be for an amount not to exceed--
(I) 75 percent loan-to-value on the
land;
(II) 100 percent for construction
and development costs; and
(III) 80 percent of the market
value of the building project.
(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.
(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.
(7) Government guarantee.--
(A) Level of participation.--Loans guaranteed under
the Loan Guarantee Program shall be guaranteed at 80
percent of the loan amount.
(B) Payment of accrued interest.--
(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.
(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.
(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.
(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.
(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.
(c) Definitions.--For purposes of this section:
(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)).
(2) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(d) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary $15,000,000,000 to carry out this
section.
(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.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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