AD&C Loans Getting Tougher to Obtain Nationally

Lenders Asking Builders, Developers to Pay Down Loans

A recent snapshot of builders and developers in a special survey by the NAHB Economics Group has found that acquisition, development and construction (AD&C) credit has tightened since last year.

In addition, while not a majority, significant numbers of builders and developers have been asked to pay down outstanding construction and land acquisition or development loans, according to the study.

More than 80% of all the respondents reported that the availability of new credit for land acquisition and land development had tightened this year compared to the second half of 2007.

Sixty-nine percent of the respondents said that credit had become more constricted over that timeframe for single-family construction loans, while 29% responded that loan availability remained about the same.

On the multifamily production front, 78% reported worsening conditions for construction loans, and 20% said they had seen no change.

The NAHB survey found that lenders have been making adjustments on existing loans, and hurting businesses, in these four areas:

For single-family construction loans, 34% of those polled said that lenders had ordered new appraisals — 19% saying that most of their loans were being reviewed and 15% saying that some of their loans were being put up for reinspection.

Of those who saw new appraisals ordered for their single-family building loans, 62% said they were asked to pay down part of the original loans and 49% were asked to put up additional assets as collateral. Some were required to do both.

Twenty five percent of the respondents said that lenders required new appraisals on their multifamily construction loans, 16% reporting that the order was for most of their loans and 9% saying it was for some of them.

Sixty-one percent of those who saw their multifamily building loans reappraised were asked to pay down part of the original loans and 57% were asked for more collateral. Again, some had to do both.



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