Two Republican lawmakers, seeking to divert growing support from other Republicans for an expanded FHA mortgage insurance program, plan to introduce a bill of their own.

It would reduce regulation of home building and make permanent a popular government-insured mortgage for elderly homeowners.

Reps. James A. Leach, R-Iowa, and Rick Lazio, R-N.Y., disclosed in a letter to Speaker Newt Gingrich, R-Ga., that they would introduce the bill this week. The letter criticized the Clinton administration's plan to increase the FHA loan limit to $227,150, from $170,362, as a step toward "a socialization of the financial mortgage markets."

Their views are important because Rep. Leach is chairman of the Banking Committee, which oversees the FHA program, and Rep. Lazio is chairman of its housing subcommittee.

Their colleagues, however, are finding ways around Rep. Leach's and Rep. Lazio's opposition.

In a letter released Friday, 63 Republicans, including several conservatives, wrote to Rep. Jerry Lewis, the California Republican whose Appropriations subcommittee oversees the Department of Housing and Urban Development's budget. They asked Rep. Lewis to include a provision for the higher FHA loan limits in the Appropriations bill. The higher limits would raise $212 million of additional revenue in the 1999 fiscal year.

"Homeownership is crossing the aisle," said Michael J. Ferrell, senior staff vice president and legislative counsel of the Mortgage Bankers Association. "Republicans have seized this as an issue to ride."

Republicans have traditionally opposed FHA expansions, maintaining that a bigger FHA would inhibit the private market and put the government at greater financial risk. In an election year, that is a tough row to hoe, however.

In their letter to Rep. Gingrich, Reps. Leach and Lazio asked for his "assistance in ensuring that the administration's FHA proposal is not considered in the Appropriations process."

They said it should be discussed in the Banking Committee's hearings on their bill to promote homeownership.

Several members of the Banking Committee, including Rep. Marge Roukema, who leads the financial institutions and consumer credit subcommittee, have declared their support for the Clinton administration proposal. Rep. Roukema co-authored another letter to Rep. Lewis, asking him to include an expanded FHA program in the Appropriations bill.

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