Home Builders Report Severe Lack of Credit

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Home Builders Report Severe Lack of Credit

 

 

Washington, DC, Sept. 29, 2009--Nearly two-thirds of single-family home builders are reporting a severe lack of credit for housing production, threatening the fragile housing recovery before it has time to take hold, according to a new builder survey of acquisition, development and construction (AD&C) financing conducted by the National Association of Home Builders.

"Across the country, home builders and developers are reporting a deterioration in credit availability and intensifying pressure on borrowers with outstanding loans," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

 

"Lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses on AD&C loans. With the pending expiration of the $8,000 first-time home buyer tax credit, these challenges threaten to halt any positive developments we have seen in the housing market in recent months."

In the latest National Association of Home Builders' survey of financing conditions, 63 percent of builders said that the availability of credit for single-family construction loans worsened in the second quarter of 2009.

Builders reporting deteriorating credit conditions said that that lenders are lowering the allowable loan-to-value ratio, are not making new loans, are reducing the amount they are willing to lend, and are requiring personal guarantees or collateral not related to the project.

Two-thirds of respondents reported putting single-family construction projects on hold until the financing climate gets better.

Builders said the top reason that lenders have given them for restricting the availability of new loans or for tightening the terms of outstanding loans is that "regulators are forcing lenders to do it."