FHA to Consider Backing ADC Loans

The Federal Housing Administration is willing to consider backing acquisition, development, and construction loans for single-family houses.FHA Commissioner Brian Montgomery did not mention the possibility of insuring ADC loans to builders during his talk at the National Association of Home Builders Convention in Orlando, Fla. But Dallas builder Kent Conine, a former NAHB president, said Mr. Montgomery was "intrigued" by the idea when the two met in Washington recently. The FHA commissioner "asked for a cost-benefit analysis," Mr. Conine said. "If we can show him how it would work and how it would benefit consumers, he said he would do a pilot." According to the Dallas builder, Mr. Montgomery "made no promises." Nevertheless, he called the commissioner's willingness to entertain a proposal "good news." "If we can get our nose under the tent, sooner or later we can get a full-scale program," he told an NAHB leadership committee. Mr. Conine said he believes ADC funding is "an area where the FHA could really shine," especially in rural markets and places where builders find it difficult to secure financing from conventional lenders.