Prospects dim; Senate action holds key to higher FHA loan limits.

Proponents of an increase in the FHA loan limits may face an uphill battle to ge t those higher ceilings in-cluded in the House-Senate conference committee version of the housi ng reauthorization bill. HUD had two shots at getting the higher FHA limits passed, but lost on the first attempt when the HUD/VA appropriations conference committee chose to endorse a Senate version tha t features the smaller of the two proposed loan-limit increase methods. That Senate plan calls for the FHA ceiling to remain at $151,725 in high-cost ar eas, but would rise to $77,500 in low-cost areas, up from $67,500, or 38% of the conventional l oan limit. HUD had hoped the committee would adopt a House-approved increase that would lift th e FHA maximum loan ceiling to 85% of conventional loan limits, or $172,675. It would r aise the floor to $101,575, or 50% of the conventional limit. The FHA increases approved in the appropriations bill mirror the Senate-endorsed provisions in the reauthoriza-tion bill that will likely go to conference, and thats the probl em for HUD. Steve Verdier, legislative counsel for the Savings & Community Bankers of Americ a, said the reauthorization conference committee may follow the appropriations committees le ad and agree to the lower-level increases rather than the HUD-favored plan. Others, however, speculate that HUD is so concerned that the entire bill may be scrubbed because of the controve rsial provisions that it will allow it to be stripped down so that good govern-ment provisions, s uch as assistance for public housing and the homeless, survive. The Senate isnt expected to take up the reauthorization bill the week of Sept. 1 2, but depending on how health care and other issues progress, it could be voted on the week of S ept. 19. The conference committee would then take it up, but because of the disagreement son the legislation in the Senate, it may be difficult for the committee to reach a consensus before the Oct. 7 recess.