I 
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 Representa-
tives 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— 
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(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 ongo-
ing 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 rule-
making with respect to financial institutions under their 
respective jurisdictions that make real estate loans to 
home builders. Such rulemaking shall provide for the fol-
lowing: 
(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 
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represent 100 percent or more of its total cap-
ital, the appropriate Federal banking agency 
shall not prohibit any such institution from con-
tinuing to make such loans to home builders. 
(B) LENDING
DECISIONS.—The appro-
priate 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 Sys-
tem. 
(2) REALISTIC MARKET BASED APPRAISALS.— 
(A) VALUATION
STANDARD.—The appro-
priate Federal banking agency shall require 
that entities used by financial institutions to as-
sess the value of collateral, with respect to a 
real estate loan, associated with any viable 
project in such institution’s lending portfolio 
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utilize an as completed valuation to make such 
an assessment. 
(B) ARMS LENGTH TRANSACTIONS.—The 
appropriate Federal banking agency shall re-
quire 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 enact-
ment of this Act use comparable sales involving 
arms length transactions to make such an as-
sessment or review. 
(3) PROHIBITION ON COMPELLING LENDERS TO 
CALL OR CURTAIL LOANS IN GOOD STANDING.— 
(A) HOME
BUILDERS
IN
GOOD
STAND-
ING.—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 com-
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pleted valuation, permit a financial institu-
tion to work with such home builder to re-
alize the maximum current market valu-
ation of such collateral using workout 
methods or other appropriate means. 
(ii) PERIOD
OF
WORKOUT
METH-
ODS.—Workout methods may be utilized 
up to a 24-month period following the 
issuance of final regulations under sub-
section (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 work-
out 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 insti-
tution’s balance sheet, unless there is a signifi-
cant reason under Financial Accounting Stand-
ards 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 im-
prove a financial institution’s CAMEL composite 
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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
COM-
PARABILITY.—Each of the agencies with authorities re-
ferred to in subsection (a) shall consult and coordinate 
with the other such agencies and authorities for the pur-
pose of assuring, to the extent possible, that the regula-
tions 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 authori-
ties referred to in subsection (a) shall issue final regula-
tions 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 
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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
AGEN-
CY.—The term ‘‘appropriate Federal banking agen-
cy’’ 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 ab-
sorption of the development and construction associ-
ated with the highest and best use of the collateral. 
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(4) FINANCIAL
INSTITUTION.—The term ‘‘fi-
nancial institution’’ means an entity regulated by, 
and under the supervision of, any appropriate Fed-
eral banking agency. 
(5) GOOD STANDING.—The term ‘‘good stand-
ing’’ means making payments on a real estate loan 
in accordance with the agreement of such loan. 
(6) REAL ESTATE LOAN.—The term ‘‘real es-
tate loan’’ means any indebtness (secured by a mort-
gage, 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 in-
stitution 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 
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institution has determined continues to have a rea-
sonable 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 re-
appraisal methods. 
Æ 
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