[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1255 Introduced in House (IH)]

113th CONGRESS
  1st Session
                                H. R. 1255

  To enable Federal and State chartered banks and thrifts to meet the 
 credit needs of the Nation's home builders, and to provide liquidity 
 and ensure stable credit for meeting the Nation's need for new homes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 19, 2013

Mr. Gary G. Miller of California (for himself and Mrs. McCarthy of New 
    York) introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To enable Federal and State chartered banks and thrifts to meet the 
 credit needs of the Nation's home builders, and to provide liquidity 
 and ensure stable credit for meeting the Nation's need for new homes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Home Construction Lending Regulatory 
Improvement Act of 2013''.

SEC. 2. PURPOSE.

    It is the purpose of this Act to--
            (1) immediately provide authority and guidance that Federal 
        and State bank regulators can use to ensure that Federal and 
        State chartered banks and thrifts that provide financing to 
        America's home builders are permitted to make loans, provide 
        ongoing liquidity, and ensure stable financing to such home 
        builders; and
            (2) enable Federal and State chartered banks and thrifts to 
        provide initial and ongoing credit to America's home builders 
        to aid in restoring liquidity to the home building sector and 
        to restore vitality to the United States residential housing 
        market.

SEC. 3. COORDINATED RULEMAKING.

    (a) Initiation of Proceedings.--Not later than 90 days after the 
enactment of this Act, the appropriate Federal banking agencies shall 
initiate a coordinated rulemaking with respect to financial 
institutions under their respective jurisdictions that make real estate 
loans to home builders. Such rulemaking shall provide for the 
following:
            (1) Elimination of the 100 percent of bank capital 
        measurement.--
                    (A) Loan origination.--If any qualified financial 
                institution is holding real estate loans in its lending 
                portfolio that in the aggregate represent 100 percent 
                or more of its total capital, the appropriate Federal 
                banking agency shall not prohibit any such institution 
                from continuing to make such loans to home builders.
                    (B) Lending decisions.--The appropriate Federal 
                banking agency shall not prevent a qualified financial 
                institution from making a real estate loan to a home 
                builder that has a viable project.
                    (C) Qualified financial institution defined.--For 
                purposes of this paragraph, the term ``qualified 
                financial institution'' means a financial institution 
                that received, in the most recent examination of the 
                institution, a CAMEL composite rating of 1, 2, or 3 
                under the Uniform Financial Institutions Rating System.
            (2) Realistic market based appraisals.--
                    (A) Valuation standard.--The appropriate Federal 
                banking agency shall require that entities used by 
                financial institutions to assess the value of 
                collateral, with respect to a real estate loan, 
                associated with any viable project in such 
                institution's lending portfolio utilize an as completed 
                valuation to make such an assessment.
                    (B) Arms length transactions.--The appropriate 
                Federal banking agency shall require that entities used 
                by financial institutions to assess or review 
                underwriting standards and collateral values for real 
                estate loans made by such institutions after the date 
                of the enactment of this Act use comparable sales 
                involving arms length transactions to make such an 
                assessment or review.
            (3) Prohibition on compelling lenders to call or curtail 
        loans in good standing.--
                    (A) Home builders in good standing.--The 
                appropriate Federal banking agency shall not compel a 
                financial institution to call or curtail a real estate 
                loan of a home builder that is in good standing.
                    (B) Maximum market valuation.--
                            (i) In general.--The appropriate Federal 
                        banking agency shall, in the case that a home 
                        builder is in good standing on a real estate 
                        loan but the home builder's collateral, with 
                        respect to that loan, has decreased in value 
                        based on an as completed valuation, permit a 
                        financial institution to work with such home 
                        builder to realize the maximum current market 
                        valuation of such collateral using workout 
                        methods or other appropriate means.
                            (ii) Period of workout methods.--Workout 
                        methods may be utilized up to a 24-month period 
                        following the issuance of final regulations 
                        under subsection (c). In no case shall any real 
                        estate loan be required to be charged off until 
                        the financial institution holding such loan has 
                        worked in good faith to exhaust all workout 
                        methods or other appropriate means.
                    (C) Reclassification of loans.--The appropriate 
                Federal banking agency shall not require a financial 
                institution to reclassify any real estate loan in this 
                paragraph on such institution's balance sheet, unless 
                there is a significant reason under Financial 
                Accounting Standards Board Accounting Standards 
                Codification 310-10-35-55 or 310-10-35-57.
            (4) Waiting period.--If the enactment of paragraphs 2 or 3 
        of this subsection helps to improve a financial institution's 
        CAMEL composite rating under the Uniform Financial Institutions 
        Rating System from a 4 or 5 to a 1, 2, or 3 in such 
        institution's next examination that begins after the date that 
        final regulations are issued pursuant to subsection (c), such 
        institution's improved rating shall take effect no earlier than 
        24 months after such rating was received.
    (b) Coordination, Consistency, and Comparability.--Each of the 
agencies with authorities referred to in subsection (a) shall consult 
and coordinate with the other such agencies and authorities for the 
purpose of assuring, to the extent possible, that the regulations by 
each such agency and authority are consistent and comparable with those 
prescribed by the other such agencies and authorities.
    (c) Deadline.--Not later than 6 months after the enactment of this 
Act, each of the agencies with authorities referred to in subsection 
(a) shall issue final regulations to implement rules issued under this 
Act.
    (d) Agency Authority.--The rules issued under this Act shall be 
enforced by the appropriate Federal banking agencies with respect to 
financial institutions under their respective jurisdictions.
    (e) Effect on State Law.--The rules issued under this Act shall not 
supercede the law of any State except to the extent that such law is 
inconsistent with such rule, and then only to the extent of the 
inconsistency.

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency'' has the same meaning as 
        is given such term in section 3(q) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(q)).
            (2) Arms length transaction.--
                    (A) In general.--The term ``arms length 
                transaction'' means a negotiated real estate 
                transaction between a buyer and seller in which such 
                buyer and seller act independently of each other.
                    (B) Transactions excluded.--Such term shall not 
                include any transaction involving a short sale or 
                foreclosed property or any other distressed real 
                property.
            (3) As completed valuation.--The term ``as completed 
        valuation'' means the estimated market value of collateral 
        after the full completion and absorption of the development and 
        construction associated with the highest and best use of the 
        collateral.
            (4) Financial institution.--The term ``financial 
        institution'' means an entity regulated by, and under the 
        supervision of, any appropriate Federal banking agency.
            (5) Good standing.--The term ``good standing'' means making 
        payments on a real estate loan in accordance with the agreement 
        of such loan.
            (6) Real estate loan.--The term ``real estate loan'' means 
        any indebtness (secured by a mortgage, deed of trust, or other 
        equivalent consensual security interest on real property) 
        acquired for the purpose of purchasing or improving real 
        property, including indebtness acquired for--
                    (A) land acquisition;
                    (B) land development; and
                    (C) residential construction projects.
            (7) Total capital.--The term ``total capital'' means the 
        total risk-based capital of a financial institution as reported 
        periodically by such institution in the Federal Financial 
        Institutions Examination Council's Call Report or Thrift 
        Financial Reports, as applicable.
            (8) Viable project.--The term ``viable project'' means a 
        real estate project that a financial institution has determined 
        continues to have a reasonable prospect of reaching completion 
        and sale.
            (9) Workout methods.--The term ``workout methods'' means 
        techniques to prevent a real estate loan defaulting, including 
        workout assistance, loan modifications, loan write downs, and 
        flexibility on reappraisal methods.
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