Regulators to Collect Additional AD&C Loan Data
Efforts by NAHB to have federal agencies collect more detailed information on the activity and performance of residential acquisition, development and construction (AD&C) loans in order to support a system for securitizing them has begun showing some encouraging results.
NAHB has obtained data on AD&C lending from the Office of Thrift Supervision demonstrating that the loans have performed exceptionally well historically when compared to other loans in thrift portfolios, and that the losses experienced on single-family construction loans have been close to the low loss rate on home mortgages.
In a series of comment letters and meetings, NAHB’s Senior Officers and staff have urged banking regulator officials to collect more detailed AD&C data in the Bank Call Report, a quarterly report of all lending, investment and other activities that banks must file with their regulator.
Responding to the association’s efforts, on Aug. 24 the banking agencies issued a request for public comment on a series of changes to the Call Report that would enhance the level of detail provided for residential land development and construction (D&C) loans.
The agencies have proposed adding a line item to the Call Report that would break out lending activity and performance data for residential (one- to four-family) D&C loans from all other D&C lending.
The agencies have also recommended detailed reporting for banks with large concentrations of commercial real estate loans.
It is expected that the data collected under the new reporting requirements will show that residential construction loans are less risky that other construction lending.
Comments must be submitted to the agencies by Oct. 24.
NAHB is preparing a strategy to endorse the agencies’ proposed changes and press for additional AD&C reporting.
For more information, e-mail Michael Carrier at NAHB, or call him at 800-368-5242 x8529.