I 

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. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Residential Construc5 tion Lending Act’’. 

6 SEC. 2. RESIDENTIAL CONSTRUCTION LOAN GUARANTEE 

7 PROGRAM. 

8 (a) ESTABLISHMENT.—There is established within 

9 the Department of the Treasury a program to be known 


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1 as the ‘‘Residential Construction Loan Guarantee Pro2 gram’’ (hereinafter referred to in this section as the ‘‘Loan 

3 Guarantee Program’’). 

4 (b) LOAN GUARANTEE PROGRAM.— 

5 (1) PURPOSE.—The purpose of the Loan Guar6 antee Program is to guarantee loans made to eligible 

7 home building companies for viable building projects. 

8 (2) APPLICATION.—An insured depository insti9 tution that wishes to make loans that are guaran10 teed under the Loan Guarantee Program may sub11 mit an application to the Secretary in such form and 

12 manner and containing such information as the Sec13 retary may require. 

14 (3) SELECTION CRITERIA.— 

15 (A) IN GENERAL.—The Secretary shall ap16 prove any insured depository institution submit17 ting a full and complete application under para18 graph (2) for participation in the Loan Guar19 antee Program, and shall guarantee loans on a 

20 first-come-first-served basis. 

21 (B) SUBMISSION OF LOANS.—Insured de22 pository institutions approved for participation 

23 in the Loan Guarantee Program shall submit 

24 each loan made by such institution as part of 

25 the Loan Guarantee Program to the Secretary 


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1 so the Secretary may confirm that such loan 

2 complies with the requirements of this section. 

3 (4) OVERSIGHT.— 

4 (A) LOAN TERMS.—Not later than 7 days 

5 after a loan guaranteed under the Loan Guar6 antee Program is originated, the insured depos7 itory institution making such loan shall submit 

8 all information about the terms and conditions 

9 of such loan to the Secretary. 

10 (B) SUSPENSION AND TERMINATION AU11 THORITY.—Notwithstanding paragraph (3), the 

12 Secretary shall, not less than yearly, review all 

13 of the loans made by each insured depository 

14 institution that are guaranteed under the Loan 

15 Guarantee Program, and may suspend or termi16 nate any insured depository institution’s future 

17 participation in the Loan Guarantee Program if 

18 the Secretary finds that such institution has en19 gaged in fraud or abuse with respect to the 

20 Loan Guarantee Program, or has consistently 

21 made loans guaranteed under the Loan Guar22 antee Program that are not repaid by the bor23 rower in accordance with the terms of the loan. 


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1 (5) LOAN ELIGIBILITY.—A loan may only be 

2 guaranteed under the Loan Guarantee Program if it 

3 meets the following criteria: 

4 (A) VIABLE BUILDING PROJECT.—The 

5 loan must be made for a viable building project, 

6 as determined by the Secretary. In making such 

7 determination, the Secretary shall consider 

8 housing demand, local government support, per9 centage of workforce, and speculative units. 

10 (B) ELIGIBLE HOME BUILDING COM11 PANY.—The loan must be made to an eligible 

12 home building company, as determined by the 

13 Secretary. In making such determination, the 

14 Secretary shall consider whether such company 

15 is creditworthy, reputable, and has a record of 

16 successful residential building projects. 

17 (C) LOAN GUARANTEE AMOUNT LIMITA18 TION.—The eligible home building company, or 

19 its principals, must have a minimum net worth 

20 equal to the loan amount to be guaranteed. 

21 (D) USE OF LOAN.—The loan may only be 

22 used for the acquisition, development, and con23 struction of residential developments that have 

24 locally approved development plans and that 

25 create immediate job opportunities. 


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1 (E) TERM REQUIREMENTS.— 

2 (i) IN GENERAL.—The term of the 

3 loan shall be for no more than 5 years, but 

4 may have an option to extend. 

5 (ii) LOAN AMOUNT LIMITATIONS.— 

6 The loan shall be for an amount not to ex7 ceed— 

8 (I) 75 percent loan-to-value on 

9 the land; 

10 (II) 100 percent for construction 

11 and development costs; and 

12 (III) 80 percent of the market 

13 value of the building project. 

14 (F) INTEREST RATES.—Notwithstanding 

15 the provisions of the constitution of any State 

16 or the laws of any State limiting the rate or 

17 amount of interest which may be charged, 

18 taken, received, or reserved, the maximum legal 

19 rate of interest on the loan may not sub20 stantively differ from the current average mar21 ket yield on outstanding marketable obligations 

22 of similar privately held loans with remaining 

23 periods to maturity comparable to such loan. 

24 (6) MULTIPLE GUARANTEES PERMITTED; AG25 GREGATE DOLLAR AMOUNT LIMITATION.—A single 


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1 eligible home building company is permitted to have 

2 more than one loan guaranteed under the Loan 

3 Guarantee Program, but the aggregate amount of all 

4 such loans guaranteed for a single eligible home 

5 building company may not exceed the net worth of 

6 such company. The Secretary may exempt an eligible 

7 home building company from the net worth limita8 tion of this paragraph if the Secretary determines 

9 doing so will advance the purpose of this Loan 

10 Guarantee Program. 

11 (7) GOVERNMENT GUARANTEE.— 

12 (A) LEVEL OF PARTICIPATION.—Loans 

13 guaranteed under the Loan Guarantee Program 

14 shall be guaranteed at 80 percent of the loan 

15 amount. 

16 (B) PAYMENT OF ACCRUED INTEREST.— 

17 (i) IN GENERAL.—Any insured deposi18 tory institution making a claim for pay19 ment on the guaranteed portion of a loan 

20 guaranteed under the Loan Guarantee 

21 Program shall be paid the accrued interest 

22 due on the loan from the earliest date of 

23 default to the date of payment of the claim 

24 at a rate not to exceed the rate of interest 


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1 on the loan on the date of default, minus 

2 one percent. 

3 (ii) LOANS SOLD ON SECONDARY MAR4 KET.—If a loan described under clause (i) 

5 is sold on the secondary market, the 

6 amount of interest paid to an insured de7 pository institution described in that clause 

8 from the earliest date of default to the 

9 date of payment of the claim shall be no 

10 more than the agreed upon rate, minus one 

11 percent. 

12 (iii) INTEREST RATE.—The rate of in13 terest to be paid on a claim for payment 

14 on the guaranteed portion of a loan guar15 anteed under the Loan Guarantee Pro16 gram shall be established commensurate 

17 with Federal Housing Administration 

18 rates, based on safety and soundness. 

19 (8) ONE-THIRD OF GUARANTEES TO BE MADE

20 IN AREAS WITH GREATEST UNMET NEED.—Notwith21 standing any other provision of this section, not less 

22 than one-third of the funds made available under 

23 this section to guarantee loans shall be used to guar24 anteed loans in areas of the United States that have 


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1 the greatest unmet need for residential construction 

2 financing, as determined by the Secretary. 

3 (9) REGULATIONS.—The Secretary shall pro4 mulgate any regulations needed to carry out this 

5 section through a notice and public comment period 

6 of not more than 60 days. 

7 (c) DEFINITIONS.—For purposes of this section: 

8 (1) INSURED DEPOSITORY INSTITUTION.—The 

9 term ‘‘insured depository institution’’ has the mean10 ing given such term under section 3(c)(2) of the 

11 Federal Deposit Insurance Act (12 U.S.C. 

12 1813(c)(2)). 

13 (2) SECRETARY.—The term ‘‘Secretary’’ means 

14 the Secretary of the Treasury. 

15 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

16 are authorized to be appropriated to the Secretary 

17 $15,000,000,000 to carry out this section. 

18 (e) TERMINATION OF AUTHORITY.—The Secretary’s 

19 authority to make new loan guarantees under the Loan 

20 Guarantee Program shall terminate after the 3-year pe21 riod beginning on the date of the enactment of this sec22 tion. 

Æ 


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