NAHB Seeking More ADC Funding Sources

Armed for the first time with data showing the superior performance of construction loans, the National Association of Home Builders is stepping up its pursuit of additional sources of production financing.Capital market support for production lending is "one of NAHB's highest priorities" for 2003, assistant staff vice president Michelle Hamecs said at the group's annual convention in Las Vegas. The push is coming at a time when builders are having little trouble finding the backing they need to buy land, develop it, and put up houses. But Ms. Hamecs, recalling the severe credit crunch that plagued the business in the early 1990s, said "we all remember the bad old days ... and we don't want to go back there." As a "first step," NAHB researchers believe they finally have the evidence they need to convince regulators that residential construction mortgages perform well relative to other types of real estate loans. Information from the Office of Thrift Supervision that was not previously available to the public shows "the loss experience on single-family construction loans has been very close to the very low rate" on permanent mortgages granted to consumers, they said. "The bottom line," Ms. Hamecs said at an NAHB Capital Markets Subcommittee meeting, is that the net chargeoff rate for one- to four-unit residential construction loans is "just a hair above" that for home mortgages.