WASHINGTON - The administration's latest blueprint to redesign the Federal Housing Administration is being criticized by a key congressman.

Rep. Rick A. Lazio, R-N.Y., seemed to suggest that the agency should target its programs more narrowly, perhaps on low-income and first-time homebuyers. The congressman chairs the housing subcommittee of the House Banking Committee.

The administration's sketchy plan describes a new government-controlled corporation that, like Fannie Mae and Freddie Mac, would be regulated by the Department of Housing and Urban Development and the Office of Federal Housing Enterprise Oversight.

Called the Federal Housing Corp., it would apparently continue to serve low- and middle-income borrowers. The administration, which released the plan Monday, has proposed that the current loan ceilings remain in place.

Rep. Lazio said the blueprint failed to address the central question of what the federal government's role should be in homeownership.

"If the administration is serious about developing a state-of-the-art corporation that will promote homeownership, we must first know who . . . it will serve," he said.

In an interview, Rep. Lazio laid out his opinions on restructuring the housing agency.

He said he believes that the FHA's mission is "not to be competitive with the private sector, but to be an alternative where the private sector is absent."

Now that private mortgage insurers back loans with as little as 3% down, Rep. Lazio said, the FHA's mission needs to be redefined.

He said several issues still had to be resolved in the FHA debate.

These include whether FHA loans should be fully backed by the federal government, whether the agency should be restricted to serving first-time homebuyers, and if the loan ceilings should be retargeted.

Rep. Lazio said he was "uncomfortable" with one proposal that would revamp the FHA by turning its administration over to Fannie Mae and Freddie Mac.

"You would have a nonpublic entity extending the credit and the full faith of the federal government. The only entity that should do that should be the federal government itself," Rep. Lazio said.

He added that another proposal for the FHA to share the risk of the loans with private investors and mortgage insurers was "controversial" but would be examined.

The FHA has been under fire from private mortgage insurers, who argue that the housing agency should confine itself to insuring loans made to low-income and first-time homebuyers.

While two-thirds of the FHA's single-family loans are made to first-time homebuyers, the administration has been unwilling to restrict the agency to the lowest end of the market.

Administration officials have argued that doing so would place the FHA insurance fund at too much risk.

The latest proposal indicates that the administration's views are unchanged.

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