NVR Mortgage Finance, the financing arm of homebuilder NVR Inc., disclosed that it had secured a new $125 million line of credit, but that restrictions were in place as to how the money could be dispersed.
The unit, which handles in-house mortgage operations for a variety of NVR home building companies, received the line of credit on the basis that it couldn’t be used to finance risky home loans.
The restrictions will severely limit financing options for the homebuilder, making it much more difficult to unload stagnating housing inventories.
The news will likely hit homebuilders hard, particularly because they tend to finance a large percentage of the homes they sell.
But the there’s no reason a homebuilder should have access to a portfolio of mortgage programs that aren’t in line with current market demand.
It’s believed that many other homebuilders will be faced with a similar fate as the mortgage woes trickle down to related industries.
The credit line is being extended by U.S. Bank National Association, Comerica Bank, National City Bank and Washington Mutual Bank.
NVR homebuilding operates in eighteen metropolitan areas in eleven states, including Maryland, Virginia, West Virginia, Pennsylvania, New York, New Jersey, Delaware, Ohio, North Carolina, South Carolina and Tennessee.