The nation’s homebuilders are throwing their support behind a bill filed yesterday that they say will help alleviate the lack of credit for acquisition, development and construction financing.

The legislation, known as the Residential Construction Lending Act, would create a new residential construction loan guarantee program within the Department of Treasury to provide loans to builders with viable construction projects. Designed to unfreeze credit for small home building firms, the measure would expand the flow of credit to residential builders on competitive terms.

The legislation was introduced by Reps. Brad Miller (D-N.C.) and original co-sponsors Carolyn Maloney (D-N.Y.) and Joe Baca (D-Calif.)

"We applaud these lawmakers for taking the lead to address the housing production credit crisis that is jeopardizing the housing and economic recovery now under way," said National Association of Home Builders’ Chairman Bob Jones, a homebuilder from Bloomfield Hills, Mich.

 Under pressure to reduce their exposure to development and construction loans to builders and curtail their outstanding portfolios of real estate loans, many lenders are refusing to make loans for viable new housing projects and cutting off the funding for performing loans, or calling them, NAHB said.

Performing loans are also being reappraised, reducing the value of the collateral and forcing borrowers to come up with large amounts of cash to keep their loans current, according to NAHB.