[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1255 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 1255
To enable Federal and State chartered banks and thrifts to meet the
credit needs of the Nation's home builders, and to provide liquidity
and ensure stable credit for meeting the Nation's need for new homes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 19, 2013
Mr. Gary G. Miller of California (for himself and Mrs. McCarthy of New
York) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To enable Federal and State chartered banks and thrifts to meet the
credit needs of the Nation's home builders, and to provide liquidity
and ensure stable credit for meeting the Nation's need for new homes.
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 ``Home Construction Lending Regulatory
Improvement Act of 2013''.
SEC. 2. PURPOSE.
It is the purpose of this Act to--
(1) immediately provide authority and guidance that Federal
and State bank regulators can use to ensure that Federal and
State chartered banks and thrifts that provide financing to
America's home builders are permitted to make loans, provide
ongoing liquidity, and ensure stable financing to such home
builders; and
(2) enable Federal and State chartered banks and thrifts to
provide initial and ongoing credit to America's home builders
to aid in restoring liquidity to the home building sector and
to restore vitality to the United States residential housing
market.
SEC. 3. COORDINATED RULEMAKING.
(a) Initiation of Proceedings.--Not later than 90 days after the
enactment of this Act, the appropriate Federal banking agencies shall
initiate a coordinated rulemaking with respect to financial
institutions under their respective jurisdictions that make real estate
loans to home builders. Such rulemaking shall provide for the
following:
(1) Elimination of the 100 percent of bank capital
measurement.--
(A) Loan origination.--If any qualified financial
institution is holding real estate loans in its lending
portfolio that in the aggregate represent 100 percent
or more of its total capital, the appropriate Federal
banking agency shall not prohibit any such institution
from continuing to make such loans to home builders.
(B) Lending decisions.--The appropriate Federal
banking agency shall not prevent a qualified financial
institution from making a real estate loan to a home
builder that has a viable project.
(C) Qualified financial institution defined.--For
purposes of this paragraph, the term ``qualified
financial institution'' means a financial institution
that received, in the most recent examination of the
institution, a CAMEL composite rating of 1, 2, or 3
under the Uniform Financial Institutions Rating System.
(2) Realistic market based appraisals.--
(A) Valuation standard.--The appropriate Federal
banking agency shall require that entities used by
financial institutions to assess the value of
collateral, with respect to a real estate loan,
associated with any viable project in such
institution's lending portfolio utilize an as completed
valuation to make such an assessment.
(B) Arms length transactions.--The appropriate
Federal banking agency shall require that entities used
by financial institutions to assess or review
underwriting standards and collateral values for real
estate loans made by such institutions after the date
of the enactment of this Act use comparable sales
involving arms length transactions to make such an
assessment or review.
(3) Prohibition on compelling lenders to call or curtail
loans in good standing.--
(A) Home builders in good standing.--The
appropriate Federal banking agency shall not compel a
financial institution to call or curtail a real estate
loan of a home builder that is in good standing.
(B) Maximum market valuation.--
(i) In general.--The appropriate Federal
banking agency shall, in the case that a home
builder is in good standing on a real estate
loan but the home builder's collateral, with
respect to that loan, has decreased in value
based on an as completed valuation, 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.
(ii) Period of workout methods.--Workout
methods may be utilized up to a 24-month period
following the issuance of final regulations
under subsection (c). 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.
(C) Reclassification of loans.--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
Codification 310-10-35-55 or 310-10-35-57.
(4) Waiting period.--If the enactment of paragraphs 2 or 3
of this subsection helps to improve a financial institution's
CAMEL composite rating under the Uniform Financial Institutions
Rating System from a 4 or 5 to a 1, 2, or 3 in such
institution's next examination that begins after the date that
final regulations are issued pursuant to subsection (c), such
institution's improved rating shall take effect no earlier than
24 months after such rating was received.
(b) Coordination, Consistency, and Comparability.--Each of the
agencies with authorities referred to in subsection (a) shall consult
and coordinate with the other such agencies and authorities for the
purpose of assuring, to the extent possible, that the regulations by
each such agency and authority are consistent and comparable with those
prescribed by the other such agencies and authorities.
(c) Deadline.--Not later than 6 months after the enactment of this
Act, each of the agencies with authorities referred to in subsection
(a) shall issue final regulations to implement rules issued under this
Act.
(d) Agency Authority.--The rules issued under this Act shall be
enforced by the appropriate Federal banking agencies with respect to
financial institutions under their respective jurisdictions.
(e) Effect on State Law.--The rules issued under this Act shall not
supercede the law of any State except to the extent that such law is
inconsistent with such rule, and then only to the extent of the
inconsistency.
SEC. 4. DEFINITIONS.
In this Act:
(1) Appropriate federal banking agency.--The term
``appropriate Federal banking agency'' has the same meaning as
is given such term in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)).
(2) Arms length transaction.--
(A) In general.--The term ``arms length
transaction'' means a negotiated real estate
transaction between a buyer and seller in which such
buyer and seller act independently of each other.
(B) Transactions excluded.--Such term shall not
include any transaction involving a short sale or
foreclosed property or any other distressed real
property.
(3) As completed valuation.--The term ``as completed
valuation'' means the estimated market value of collateral
after the full completion and absorption of the development and
construction associated with the highest and best use of the
collateral.
(4) Financial institution.--The term ``financial
institution'' means an entity regulated by, and under the
supervision of, any appropriate Federal banking agency.
(5) Good standing.--The term ``good standing'' means making
payments on a real estate loan in accordance with the agreement
of such loan.
(6) Real estate loan.--The term ``real estate loan'' means
any indebtness (secured by a mortgage, deed of trust, or other
equivalent consensual security interest on real property)
acquired for the purpose of purchasing or improving real
property, including indebtness acquired for--
(A) land acquisition;
(B) land development; and
(C) residential construction projects.
(7) Total capital.--The term ``total capital'' means the
total risk-based capital of a financial institution as reported
periodically by such institution in the Federal Financial
Institutions Examination Council's Call Report or Thrift
Financial Reports, as applicable.
(8) Viable project.--The term ``viable project'' means a
real estate project that a financial institution has determined
continues to have a reasonable prospect of reaching completion
and sale.
(9) Workout methods.--The term ``workout methods'' means
techniques to prevent a real estate loan defaulting, including
workout assistance, loan modifications, loan write downs, and
flexibility on reappraisal methods.
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