House and Senate banking committee leaders have taken separate stands on the much-debated FHA proposals setting the stage for a potentially raucous conference on housing reauthorization provisions.

The Senate Banking Committee passed a scaled-back version of the House legislation June 21, and significant differences exist in how FHAs loan limits would be raised. These have become key stumbling blocks to passing the legislation.

In the Senate version, lawmakers opted to keep FHAs loan ceiling at 75% of the conventional limit, now $151,725. But it also proposed removing the cap on those limits, which would allow them to move up or downalbeit in small incrementsbased on an annual housing index. Conversely, the House bill calls for a jump in the ceiling limit to 85% of the conventional limit, or $172,675.

Mortgage banking lobbyists were critical of the Senate provision and contend removing the cap wouldnt help home buyers in high- cost areas. It would be a marginal increase, said Sharon Canavan, a legislative counsel with the Mortgage Bankers Association, adding if calculated today, the increase would result in a rise of less than $1,000.Those indexed limits would have a [minimal] impact [for home buyers in high cost areas].

Another key difference between the bills is in the proposed base. The Senate passed a provision that would allow the base, or floor, to rise to 38% of the conventional limit, which would raise the limit to $77,500, up from $77,197, Canavan said. The House proposal would raise the limit to 50% of the conventional limit, or $101,575. The floor is the largest amount FHA is permitted to insure for home buyers in lower-cost regions.

Mortgage bankers and HUD were ecstatic June 16 when an FHA bill made it past the House Banking Committee virtually unscathed, but the mood among pro-FHA lobbyists is gloomier after the Senate action. Both bills must now pass before each of the houses, and full votes are expected before the recess. Fewif anychanges are expected to be made to either.

The House version, behind the strong support of House Banking Committee Chairman Henry B. Gonzalez, D-Texas, is expected to pass easily. Some Senate members, however, may not be sold and could offer changes, said Steve Verdier, a legislative counsel with the Savings & Community Bankers of America.

But others speculate because the bill has fewer bells and whistles than the Houses, the Senate will be content to pass it and fight out their differences in conference. Congress wants the legislative process completed by the summer recess, but House Banking Committee sources said that was unlikely, and early September is a more realistic timetable.

While the FHA reauthorization bill is debated in both houses, HUD may hold a trump card in the appropriations bill approved by the House June 22.

That bill has the same provisions for an increase in the FHA loan ceiling, but differs in its approach to raising the floor.

In the appropriations bill, Report No. 103-00, the floor limits would be adjusted annually based on changes in the constant quality housing price index and would be reset on a regionally indexed basis. If the FHA provisions in the appropriations bill are approved by both houses, the bill would give HUD the increase it wantsregardless of what happens to the reauth-orization bill, Canavan said.

But that authorization will only last through 1995, and must be reconsidered in 1996, which raises an interesting dilemma for supporters of the FHA proposals.

A quirk in the lawmaking process mandates the second of the two approved bills with identical proposals becomes the law, so timing has become critical for H.R 3838.

The major concern is the HUD/VA appropriations bill, with its one-year authorization for higher limits, is being slowed by controversial legislative add-ons such as the NASA space station and is threatening to fall behind the reauthorization bill in the lawmaking process.

If it does, and both are passed, the appropriations bill would pre-empt the Houses reauthorization bill, forcing lawmakers to address the issue again next year.

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