I 

112TH CONGRESS 

1ST SESSION H. R. 1755 

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 

MAY 5, 2011 

Mr. GARY G. MILLER of California (for himself, Mr. MILLER of North Carolina, Mr. TIBERI, Mr. ROSS of Florida, Mr. HANNA, Mr. WILSON of 

South Carolina, Mrs. BLACK, Mr. ROKITA, Mr. JONES, Mr. MARCHANT, 

Mr. STEARNS, Mr. SAM JOHNSON of Texas, Mr. RIBBLE, Mr. 

LUETKEMEYER, Mr. DUNCAN of Tennessee, Mr. MANZULLO, Mr. 

MULVANEY, Mr. BACA, Mrs. MCMORRIS RODGERS, Mr. CALVERT, Mr. 

PRICE of North Carolina, Mr. KISSELL, Mr. SIRES, Mr. PIERLUISI, Mr. 

SCHRADER, Mr. RIGELL, Mr. MILLER of Florida, Mr. GOWDY, Mr. GENE

GREEN of Texas, Mr. AL GREEN of Texas, and Mr. DOGGETT) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Home Construction 

3 Lending Regulatory Improvement Act of 2011’’. 

4 SEC. 2. PURPOSE. 

5 It is the purpose of this Act to— 

6 (1) immediately provide authority and guidance 

7 that Federal and State bank regulators can use to 

8 ensure that Federal and State chartered banks and 

9 thrifts that provide financing to America’s home 

10 builders are permitted to make loans, provide ongo11 ing liquidity, and ensure stable financing to such 

12 home builders; and 

13 (2) enable Federal and State chartered banks 

14 and thrifts to provide initial and ongoing credit to 

15 America’s home builders to aid in restoring liquidity 

16 to the home building sector and to restore vitality to 

17 the United States residential housing market. 

18 SEC. 3. COORDINATED RULEMAKING. 

19 (a) INITIATION OF PROCEEDINGS.—Not later than 

20 90 days after the enactment of this Act, the appropriate 

21 Federal banking agencies shall initiate a coordinated rule22 making with respect to financial institutions under their 

23 respective jurisdictions that make real estate loans to 

24 home builders. Such rulemaking shall provide for the fol25 lowing: 


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1 (1) ELIMINATION OF THE 100 PERCENT OF

2 BANK CAPITAL MEASUREMENT.— 

3 (A) LOAN ORIGINATION.—If any qualified 

4 financial institution is holding real estate loans 

5 in its lending portfolio that in the aggregate 

6 represent 100 percent or more of its total cap7 ital, the appropriate Federal banking agency 

8 shall not prohibit any such institution from con9 tinuing to make such loans to home builders. 

10 (B) LENDING DECISIONS.—The appro11 priate Federal banking agency shall not prevent 

12 a qualified financial institution from making a 

13 real estate loan to a home builder that has a 

14 viable project. 

15 (C) QUALIFIED FINANCIAL INSTITUTION

16 DEFINED.—For purposes of this paragraph, the 

17 term ‘‘qualified financial institution’’ means a 

18 financial institution that received, in the most 

19 recent examination of the institution, a 

20 CAMEL composite rating of 1, 2, or 3 under 

21 the Uniform Financial Institutions Rating Sys22 tem. 

23 (2) REALISTIC MARKET BASED APPRAISALS.— 

24 (A) VALUATION STANDARD.—The appro25 priate Federal banking agency shall require 


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1 that entities used by financial institutions to as2 sess the value of collateral, with respect to a 

3 real estate loan, associated with any viable 

4 project in such institution’s lending portfolio 

5 utilize an as completed valuation to make such 

6 an assessment. 

7 (B) ARMS LENGTH TRANSACTIONS.—The 

8 appropriate Federal banking agency shall re9 quire that entities used by financial institutions 

10 to assess or review underwriting standards and 

11 collateral values for real estate loans made by 

12 such institutions after the date of the enact13 ment of this Act use comparable sales involving 

14 arms length transactions to make such an as15 sessment or review. 

16 (3) PROHIBITION ON COMPELLING LENDERS TO

17 CALL OR CURTAIL LOANS IN GOOD STANDING.— 

18 (A) HOME BUILDERS IN GOOD STAND19 ING.—The appropriate Federal banking agency 

20 shall not compel a financial institution to call or 

21 curtail a real estate loan of a home builder that 

22 is in good standing. 

23 (B) MAXIMUM MARKET VALUATION.— 

24 (i) IN GENERAL.—The appropriate 

25 Federal banking agency shall, in the case 


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1 that a home builder is in good standing on 

2 a real estate loan but the home builder’s 

3 collateral, with respect to that loan, has 

4 decreased in value based on an as com5 pleted valuation, permit a financial institu6 tion to work with such home builder to re7 alize the maximum current market valu8 ation of such collateral using workout 

9 methods or other appropriate means. 

10 (ii) PERIOD OF WORKOUT METH11 ODS.—Workout methods may be utilized 

12 up to a 24-month period following the 

13 issuance of final regulations under sub14 section (c). In no case shall any real estate 

15 loan be required to be charged off until the 

16 financial institution holding such loan has 

17 worked in good faith to exhaust all work18 out methods or other appropriate means. 

19 (C) RECLASSIFICATION OF LOANS.—The 

20 appropriate Federal banking agency shall not 

21 require a financial institution to reclassify any 

22 real estate loan in this paragraph on such insti23 tution’s balance sheet, unless there is a signifi24 cant reason under Financial Accounting StandVerDate Mar 15 2010 04:05 May 07, 2011 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1755.IH H1755

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1 ards Board Accounting Standards Codification 

2 310–10–35–55 or 310–10–35–57. 

3 (4) WAITING PERIOD.—If the enactment of 

4 paragraphs 2 or 3 of this subsection helps to im5 prove a financial institution’s CAMEL composite 

6 rating under the Uniform Financial Institutions 

7 Rating System from a 4 or 5 to a 1, 2, or 3 in such 

8 institution’s next examination that begins after the 

9 date that final regulations are issued pursuant to 

10 subsection (c), such institution’s improved rating 

11 shall take effect no earlier than 24 months after 

12 such rating was received. 

13 (b) COORDINATION, CONSISTENCY, AND COM14 PARABILITY.—Each of the agencies with authorities re15 ferred to in subsection (a) shall consult and coordinate 

16 with the other such agencies and authorities for the pur17 pose of assuring, to the extent possible, that the regula18 tions by each such agency and authority are consistent 

19 and comparable with those prescribed by the other such 

20 agencies and authorities. 

21 (c) DEADLINE.—Not later than 6 months after the 

22 enactment of this Act, each of the agencies with authori23 ties referred to in subsection (a) shall issue final regula24 tions to implement rules issued under this Act. 


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1 (d) AGENCY AUTHORITY.—The rules issued under 

2 this Act shall be enforced by the appropriate Federal 

3 banking agencies with respect to financial institutions 

4 under their respective jurisdictions. 

5 (e) EFFECT ON STATE LAW.—The rules issued under 

6 this Act shall not supercede the law of any State except 

7 to the extent that such law is inconsistent with such rule, 

8 and then only to the extent of the inconsistency. 

9 SEC. 4. DEFINITIONS. 

10 In this Act: 

11 (1) APPROPRIATE FEDERAL BANKING AGEN12 CY.—The term ‘‘appropriate Federal banking agen13 cy’’ has the same meaning as is given such term in 

14 section 3(q) of the Federal Deposit Insurance Act 

15 (12 U.S.C. 1813(q)). 

16 (2) ARMS LENGTH TRANSACTION.— 

17 (A) IN GENERAL.—The term ‘‘arms length 

18 transaction’’ means a negotiated real estate 

19 transaction between a buyer and seller in which 

20 such buyer and seller act independently of each 

21 other. 

22 (B) TRANSACTIONS EXCLUDED.—Such 

23 term shall not include any transaction involving 

24 a short sale or foreclosed property or any other 

25 distressed real property. 


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1 (3) AS COMPLETED VALUATION.—The term ‘‘as 

2 completed valuation’’ means the estimated market 

3 value of collateral after the full completion and ab4 sorption of the development and construction associ5 ated with the highest and best use of the collateral. 

6 (4) FINANCIAL INSTITUTION.—The term ‘‘fi7 nancial institution’’ means an entity regulated by, 

8 and under the supervision of, any appropriate Fed9 eral banking agency. 

10 (5) GOOD STANDING.—The term ‘‘good stand11 ing’’ means making payments on a real estate loan 

12 in accordance with the agreement of such loan. 

13 (6) REAL ESTATE LOAN.—The term ‘‘real es14 tate loan’’ means any indebtness (secured by a mort15 gage, deed of trust, or other equivalent consensual 

16 security interest on real property) acquired for the 

17 purpose of purchasing or improving real property, 

18 including indebtness acquired for— 

19 (A) land acquisition; 

20 (B) land development; and 

21 (C) residential construction projects. 

22 (7) TOTAL CAPITAL.—The term ‘‘total capital’’ 

23 means the total risk-based capital of a financial in24 stitution as reported periodically by such institution 

25 in the Federal Financial Institutions Examination 


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1 Council’s Call Report or Thrift Financial Reports, 

2 as applicable. 

3 (8) VIABLE PROJECT.—The term ‘‘viable 

4 project’’ means a real estate project that a financial 

5 institution has determined continues to have a rea6 sonable prospect of reaching completion and sale. 

7 (9) WORKOUT METHODS.—The term ‘‘workout 

8 methods’’ means techniques to prevent a real estate 

9 loan defaulting, including workout assistance, loan 

10 modifications, loan write downs, and flexibility on re11 appraisal methods. 

Æ 


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