The bank where I work is starting to do builder loans on the commercial side for seasoned builders in the area. At my previous bank we did spec houses at 80% LTV/100% LTC all day long. Current bank is okay with doing them at those funding parameters but seems to think there may be a supervisory funding parameter issue. I can't find where any regs speak to LTC, specifically on construction. Am I missing something?

About all you are going to find I think is the following, that basically says do not get out over your skis.

The supervisory loan-to-value limits should be applied to the underlying property that collateralizes the loan. For loans that fund multiple phases of the same real estate project (e.g., a loan for both land development and construction of an office building), the appropriate loan-to-value limit is the limit applicable to the final phase of the project funded by the loan; however, loan disbursements should not exceed actual development or construction outlays.