The Construction Lending Podcast by Land Gorilla

The Shifting Terrain of Construction Lending Legislation


Land Gorilla White Background Curve

Episode 16 | The Construction Lending Podcast

In this installment, we are joined by Matt Jones, Associate Vice President of Government Housing Finance with the Mortgage Bankers Association (MBA). We’ll navigate the industry’s pressing priorities and intricate policy landscapes. Our conversation highlights the MBA’s role in shaping housing policy and its commitment to understanding and influencing governmental procedures on behalf of its members. Matt provides a comprehensive overview of what’s at stake for the industry and homeowners. We also address the current state of political affairs on Capitol Hill and discuss the potential bipartisan nature of housing policy amid political gridlock and looming elections. Get ready for an episode filled with industry perspectives, policy predictions, and a glimpse into the potential future of the housing market.

Never miss an episode

Questions Answered

  • How can advocacy efforts address the current challenges in housing supply, and what are the potential outcomes?
  • What are the implications of agency repurchase demands on the construction lending space, and how can lenders prepare for these?
  • In light of the regulatory costs post-Dodd Frank, what strategies can lenders adopt to streamline their underwriting practices while staying compliant?
  • What are the expected impacts of the energy efficiency rule on construction financing, and how should lenders and builders prepare for its implementation?
  • How do the proposed tax incentives from the Biden administration aim to address the housing supply issue, and what is their potential effectiveness?

Episode Recap

The Shifting Terrain of Construction Lending Legislation

In this episode of The Construction Lending Podcast, host Sean Faries welcomes Matt Jones, Associate Vice President of Government Housing Finance with the Mortgage Bankers Association (MBA). Together, they dive into the pressing issues facing the construction lending industry, from regulatory challenges to the evolving housing market conditions. As we unpack the wealth of knowledge shared in this episode, we’ll examine how industry professionals can effectively navigate through these complex environments to foster growth and stability in the sector.

Understanding the MBA’s Role and Priorities

The MBA is an organization within the mortgage banking landscape that provides advocacy, research, and support for its members. One of the key areas of focus for the MBA this year includes addressing the critical shortage in housing supply, recalibrating agency repurchase demands, and enhancing the liquidity in the system for servicing government loans.

Potential Bipartisan Nature of Housing Policy

Despite the goodwill among policymakers to improve housing policy, the current political climate demonstrates that significant legislative advancements remain improbable. The bipartisan support for housing initiatives gives some hope, but with political gridlock and an upcoming election, major movements are scarce. This underscores the importance of industry stakeholders remaining adaptable and proactive in their strategies.

Energy Conservation Code Standards

* Since this episode was recorded, the Housing and Urban Development Department and the Agriculture Department released a notice stating a final determination regarding the adoption of Energy Efficiency Standards for new construction of HUD and USDA-financed Housing. Read here for more information.

HUD and USDA have a proposed rule that requires newly constructed homes to be built up to the 2021 International Energy Conservation Code to be eligible for FHA and USDA financing. Only two or three states currently have adopted the 2021 standard, leaving 47 states that have not and in many cases are over ten years behind the current standard. There is a concern for states that are currently following the 2008 or 2009 code, to come up to the 2021 code could add an additional cost of $15,000 to $25,000 to the cost of buying a house. This may make it difficult for many people to afford a house. Furthermore, some jurisdictions do not have expertise in the 2021 code, making it challenging to educate people on it. This has been a joint concern for home builders and the MBA, who have been working to oppose it.

Regulatory Costs and Underwriting Practices

The episode also sheds light on the significant increase in regulatory costs post-Dodd Frank, reshaping lenders’ underwriting practices. The unpredictability of institutions in rule-making further complicates the lending environment. Matt shares insightful subtleties, such as the anticipated pushback of the energy efficiency rule, which could have substantial repercussions once they start affecting housing deals.

The Changing Market and the National Association of Realtors Settlement

A topic of considerable interest is the expected changes stemming from the National Association of Realtors settlement. With potential shifts in commissions and the buyer agents’ roles, Matt emphasizes the value of first-time homebuyers having proper representation. The settlement could disrupt traditional business models and commission structures, necessitating adaptation and innovation in the industry.

Government and Administration Priorities

Understanding the government’s and administration’s role in defining priorities remains crucial for the construction lending community. Matt highlights a working group at the MBA that focuses on these impending changes, encouraging active participation from members to shape the evolution adequately.

The Crucial Role of Regulatory Changes

The conversation drives home the pressing need for regulatory changes to facilitate more construction financing opportunities. Advocating for a poolable single-close construction to permanent program deliverable to Fannie Mae and Freddie Mac can greatly benefit independent mortgage bankers. Such initiatives could encourage more innovative and flexible lending practices, subsequently impacting the overall housing supply.

Education and FHA 203(k) Renovation Programs

Finally, the conversation veers towards the necessity of educating the industry about the FHA 203(k) renovation program. Matt stresses the call for lifting the cap and restructuring the programs to spur more renovations, suggesting a pragmatic approach towards industry-wide educational initiatives.


In this enlightening episode of The Construction Lending Podcast, Matt Jones and Sean Faries explore the myriad challenges and developments in the realm of construction lending. From regulatory hurdles to market dynamics, the discussion serves as a rich vein of insights for professionals within the field. By staying educated on legislative underpinnings, advocating for industry-friendly policies, and fostering open dialogue, stakeholders can aspire to overcome these obstacles, leading to a more robust and accessible housing market for all.

Connect with Matt Jones


Connect with the Mortgage Bankers Association



Curved separator between sections

Learn more about creating successful construction loan programs

Featured Resource

Land Gorilla Compliance Library

Understanding the complexities of state-specific construction lien law is essential for construction lenders to protect their interests and mitigate potential risks. Explore the comprehensive information for each state that is designed specifically for residential construction lenders to navigate the intricate state statutory requirements.


Read More