The National Association of Home Builder's is stating that the banking industry is making it extremely difficult for builders of single-family homes to obtain credit for their financing needs. Lack of funding will continue put a damper on new home sales recovery.
Lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses to builders of single-family homes.
Even with the extension of the $8,000 first-time home buyer tax credit, the banking industry credit crunch threaten to halt any positive developments that the housing market in coming months. Single-family home builders who build several homes a year are finding that it is impossible to obtain loans, even thou they have been in good standing prior to this newly created credit crunch. In effect, putting these home builders out of business.
A majority of home builders have stated that the availability of credit for single-family construction loans worsened in the second quarter of 2009 and looks as if it will continue on the downward spiral for the upcoming months.
A majority of new home builders stated that construction of single-family project are being put on hold until such time as the banking industry changes the deteriorating credit conditions being imposed by the banks.
There seems to be a conflict of who is responsible for the tightening of credit to home builders. The federal banking regulators state that they haven't instructed banks to stop making loans or to tighten the requirements. The banks state that they are following the guideline set by the federal banking regulators. A catch 22 situation.
The National Association of Home Buildersrs believe that regulators and lenders should provide more meaningful rules and processes which would provide residential construction borrowers who have loans in good standing by providing flexibility on re-appraisals, loan modifications and perhaps more leewayon loans to give builders time to complete and sell their inventory.
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