An increase in the FHA loan limit and the prospect of automated underwriting by yearend had HUD Secretary Andrew Cuomo brimming with confidence last weekend at the National Association of Home Builders convention in Dallas.

"It's a much, much different FHA than it was two years ago," Mr. Cuomo said. "We can now serve homebuyers with an income in the $60,000 to $70,000 range-we will make it work for the middle class.

"As many as a million more people will qualify for our loans now."

The loan limit for the FHA loan insurance program, which is administered by Mr. Cuomo's Department of Housing and Urban Development, was raised to $208,000 in October after a battle Mr. Cuomo said was "like David versus Goliath, only David had better odds."

The increase was opposed by Republicans in the Senate, who argued that larger loans are outside the agency's mandate - which is to serve low- income buyers. They argued that private-sector companies such as Fannie Mae and Freddie Mac already guarantee loans to middle-income borrowers.

"HUD housing has always been defined as low-income, but the department never stipulated that," Mr. Cuomo said. "The FHA, which is a subsidiary of HUD, is a mortgage insurance company, and we are here for the people who have been shut out of the mortgage industry because of credit or skin color."

Mr. Cuomo said the agency expects to have its own automated underwriting system by yearend, echoing advances at Fannie and Freddie.

The agency expects to back more than one million loans this year, he said. The nation's homeownership rate is 66.8%, and there were 1.5 million housing starts in 1998.

Mr. Cuomo also announced a plan that would cut the required builder warranty on new, FHA-insured homes from 10 years to one, and would let appraisers estimate the value of homes in a subdivision based on a comprehensive appraisal of a single home in the subdivision.

The agency estimated that the warranty change could save homebuyers $500 and that blanket appraisals would save home builders thousands of dollars on subdivision appraisals.

Mr. Cuomo also addressed the hot topic of balancing the need for urban development against environmental concerns.

"It cannot be a question of environmental protection or home construction-the extremes are artificial-we just have to produce more intelligently," Mr. Cuomo said.

"Let the government help by redirecting development to older suburbs and to the inner cities and by removing barriers to construction we now have to fight every day."

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