WASHINGTON -- Housing Secretary Henry Cisneros, announcing on Wednesday an improvement in the Federal Housing Administration's capital reserves, took the occasion to make a new pitch for an increase in the FHA's loan limits.

Mr. Cisneros said that according to an annual audit by Price Waterhouse, the agency's capital now "far exceeds" Congressional guidelines.

"One of the primary concerns of those who oppose the [increase in] loan limits is that the fund was not strong enough to withstand that, and that somehow it would affect soundness," Mr. Cisneros said.

"We believe just the opposite. Increased loan limits would allow FHA to work at a level of the market that only strengthens it, and the fact that we have new ratios suggests the continuing strengthening of the fund."

The administration has asked Congress to allow the FHA to insure loans up to $172,550 in high-cost areas. The current limit is $151,875.

The FHA has also sought authority to try zero down payment loans.

But opponents of the changes immediately dismissed the audit's findings.

The soundness of the fund is "irrelevant" to the policy debate over whether the FHA should finance homes for upper-middle class Americans, said Louis H. Nevins, president of the California League of Savings Institutions.

Suzanne C. Hutchinson, executive vice president of the Mortgage Insurance Companies of America, brushed aside the favorable capital ratio and pointed instead to the audit's findings that the FHA continues to be plagued by staff shortages and faulty internal controls.

"At a time when it has difficulty managing its existing business, FHA has no business taking on new business," Ms. Hutchinson said.

Mr. Cisneros acknowledged that the proposal to raise loan limits is "contentious." He said he had not obtained the backing of the powerful chairman of the House Banking committee, Henry Gonzalez, whose approval could swing enough votes to pass the higher loan limits.

"He is holding his own counsel," and working as an "honest broker" to reconcile the differences on the committee, Mr. Cisneros said of the chairman.

Without that support, the fate of the increases is uncertain. Lobbyists say that there is little appetite for an expanded FHA even on the Democratic side. The vote is too close to call, said one Republican House aide. "It's as clear as mud," the aide said.

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