Federal loan guarantees set to shrink

A temporary boost to Federal Housing Administration-guaranteed loan limits passed in 2008 is set to expire Oct. 1 unless Congress acts to extend it. Homebuilders and real-estate agents in metro Phoenix and elsewhere have been urging federal lawmakers to extend the higher FHA mortgage limits for two more years, arguing that to lower them now would have a further chilling effect on the housing market. But critics of the inflated FHA limits, implemented as part of the Economic Stimulus Act of 2008, said reducing them to 2008 levels would hurt only a tiny sliver of the housing market and actually would leave the limits higher than they should be. In February, officials from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development, of which the FHA is a part, advised congressional leaders to let the higher limits expire. Since then, two separate bills have been introduced in Congress that would extend the higher limits for two more years, but as of Monday they didn't appear to have much political momentum.

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