(AP) - Under pressure from the Bush administration, House lawmakers have scaled back a piece of an economic stimulus package designed to boost the ailing housing market, an aide said Tuesday.
A deal reached last week between House Speaker Nancy Pelosi and Republican Leader John Boehner of Ohio -- and endorsed by the White House -- raises the limit on Federal Housing Administration loans from $362,790 to as high as $729,750 in expensive areas, allowing more borrowers with weak credit to refinance into federally insured loans.
Democrats believed that the Bush administration was amenable to making that limit permanent. But the Treasury Department insisted over the weekend on making the new FHA limits expire by year-end, Steve Adamske, spokesman for Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said Tuesday.
The administration also swayed House lawmakers to narrow the legislation so that it focused on hiking the loan limits, rather than establishing a broader overhaul of the agency, which was created during the Great Depression to aid cash-strapped borrowers.
'We're baffled by this,' Adamske said, noting that the Bush administration has been advocating similar legisltion for months. 'When push came to shove, they didn't want to pass it as soon as it was possible.'
Jennifer Zuccarelli, a Treasury Department spokeswoman, said in an e-mail message that legislation overhauling the FHA and government sponsored mortgage companies Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) 'should be completed as soon as possible on a separate track from the stimulus package.'
FHA, a government agency that has insured mortgages for risky borrowers 1934, has for more than two years been pushing Congress for the ability serve more borrowers.
The stimulus bill to be considered by the House also boosts the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets until year-end.
Sen. Charles Schumer, D-N.Y, said Tuesday that he plans to ensure that provision is in a stimulus bill that Senate leaders aim to pass by week's end.
'This measure goes to the bulls-eye of the economic slowdown, which is the housing crisis,' Schumer said in a statement.