David Clark

Almost a thousand grassroots lobbyists took a crucial message to Congress during the NAHB’s recent annual Legislative Conference: The ongoing lack of AD&C credit is a serious threat to the economic recovery.

Around the country, lenders have the home building industry in a stranglehold, builders told lawmakers. If it is not released soon, the housing market turnaround could end abruptly, putting the national economic recovery in extreme jeopardy.

Not only is it virtually impossible for builders to obtain new financing for AD&C, they are being pressured by lenders for additional equity and even immediate payment on existing loans.

One of the NAHB’s most powerful advocacy tools, the annual Legislative Conference brings our members, builders, and associates to Washington every spring to meet with legislators on Capitol Hill.

This year, they held more than 275 meetings with members of Congress to discuss the credit crunch and other issues affecting housing.

The member advocates urged lawmakers to send a letter to banking regulators voicing their concerns on the lending environment. The letter asked regulators to recognize the damaging economic impact of overly restrictive lending policies. It also said that financial institutions should be encouraged to fund viable new projects and to take steps to avoid foreclosure on AD&C loans by accommodating loan modifications and workouts. “While I support prudent financial regulatory oversight, it seems that bank examiners are forcing actions that are unrelated to sensible regulatory requirements,” the letter said. “It is not in anyone’s interest—not lenders, not builders, not the economy as a whole—to deny credit for viable projects and to force performing borrowers into insolvency.”

The grassroots lobbying effort was a key component of the NAHB’s intensive ongoing effort to free up credit for the home building industry.

In addition to the meetings with members of Congress, the NAHB’s senior officers and staff met with a broad range of key federal regulators immediately before and after the board meeting.

They updated Fed Chairman Ben Bernanke and all five of the Federal Reserve Board Governors on housing issues, and then met with Board Governor Elizabeth Duke to focus on the credit crunch.

The leadership also met with senior White House economic policy officials and with other administration officials including HUD Secretary Shaun Donovan, FDIC Chairman Sheila Bair, and John Dugan, the Comptroller of the Currency.

The NAHB has also reached out to other groups that share our concerns including the National Association of Realtors, the Independent Community Bankers of America, and the National Federation of Independent Business. And at IBS this year, we introduced the Partnership Pavilion to help members connect with non-traditional lenders.

I wish I could tell you that the credit crunch for AD&C financing could be solved today and lenders would be making AD&C loans tomorrow. Unfortunately, it takes time to correct such an intractable systemic problem.

But make no mistake about it, the NAHB is leaving no stone unturned in this important advocacy effort, and we will keep up the pressure until the problem is solved.