The revised guidance for bank regulators makes clear that examiners will vary their standards for risk-management and capital according to the degree of risk posed by different types of loans. It specifically mentions pre-sold residential construction loans and multifamily mortgages as having good track records, and states that pre-sold buildings should be viewed as a form of risk mitigation.  Prior to the latest revisions, NAHB was critical of the proposal because it failed to distinguish among the different types of real estate loans, which have significant variations in risk characteristics. NAHB specifically urged that regulators modify the guidance to reflect the positive historical credit performance of housing production (acquisition, development and construction) loans and multifamily mortgages. Our comment letters to the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency (OCC) and Office of Thrift Supervision (OTS) included data demonstrating the lower credit risk posed by residential real estate loans. Also, NAHB President-Elect Brian Catalde followed up by meeting with the heads of the OCC and OTS as well as with the Treasury Assistant Secretary for Financial Institutions. Contact: Dave Ledford, x8265 for details.

NAHB Member Benefit: In the final guidance, issued Dec. 6, all of the bank regulators noted the comments of NAHB and urged distinction among the different commercial real estate lending risk classes just as we had argued. As a result, the modifications in the final rule go a long way toward reducing the possibility that this new guidance could inhibit residential real estate lending and should thereby help maintain a steady flow of capital for our members' projects.

• Extension of the placed-in-service date requirement for the
  GO Zone bonus depreciation on nonresidential real and residential rental property.
• Extension of the New Markets Tax Credit program and expansion to
  better serve the needs of rural communities.
• One-year extensions of the credit for new energy-efficient homes,
  the credit for residential energy-efficient property and the deduction for
  energy-efficient commercial buildings.
• Extension of expensing of brownfield remediation costs and expansion
  of the definition of a brownfield to include sites contaminated by
  petroleum products.
• Permanence for a change to the veterans' mortgage revenue bond
  program that eliminates that program's sunset in certain states.
• Waiver of the first-time home buyer requirement for veterans in the
  mortgage revenue bond program.
• Establishment of a one-year deduction for private mortgage insurance.

Also of note for home builders was an item that was omitted from the bill. NAHB successfully lobbied against an inclusionary zoning mandate that would have applied to one aspect of the legislation that promotes land conservation efforts in White Pine County, NV. NAHB noted that inclusionary zoning policies are not an effective means of addressing a community's housing affordability problem and that any such solution must be derived locally, not from a federal mandate. Read more in NBN Online, or contact Greg Brown, x8421.

NAHB Member Benefit: As your voice on Capitol Hill, NAHB constantly reaches out to members of the relevant tax writing committees to ensure that housing-related preferences and provisions remain a cornerstone of the nation's tax code and to encourage appropriate funding of measures designed to improve housing opportunities across the country.
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