A Republican committee is seeking to create a new government-sponsored enterprise that, with the aid of state housing agencies, would lend funds to home builders for the construction of low- to moderate-income residences.

The proposal involves the federal chartering of a $1.5 billion entity that would finance home builders in areas where real estate prices remain out of reach for first-time and low-income buyers. The initiative is authored by the House of Representatives Republican Research Committee, which is chaired by Rep. Duncan Hunter, R-Calif.

Rep. Hunter will introduce the legislation as a freestanding bill in the House of Representatives some time this month, according to Kevin W. Fitzpatrick, senior research analyst for the congressionally funded committee.

The proposal is seen as an emergency measure to stimulate lending in the banking industry's current "credit crunch" environment, he said. As such, the enterprise would have a five-year sunset, dissolving presumably after the lending crisis has been addressed.

Under the plan, state housing agencies would provide technical assistance to the enterprise by qualifying affordable-housing home builders and home buyers, Mr. Fitzpatrick said.

The Republican proposal is the latest in a series of either proposed or expanded federal corporations, many of which have affected the tax-exempt market. To date, the federal initiatives have focused on the municipal enhancement market.

Government-sponsored enterprises are quasi-public corporations created by Congress to serve public purposes. The entities address social policy issues, but retain all profits for operations and shareholder distributions.

"In some parts of the country - California, Florida, and New England - we are facing [an affordable] housing shortage," Mr. Fitzpatrick said. "To some extent, we're looking to fill a vacuum created by the whole savings and loan problem."

Housing agency executives were mixed on the idea of creating a new agency for regional lending to affordable home builders, although they agreed that new construction activity is virtually stalled.

Philip R. Miller, deputy executive director of the New Jersey Housing and Mortgage Finance Agency, said the authority would be "willing" to work with such an enterprise.

"If you could target the benefits to the low- to moderate-income constituency, it would be worthwhile," Mr. Miller said. "There has been difficulty getting banks to take any construction risk for affordable housing.

"It does have a broader economic benefit than just low- and moderate-[income] housing," he added. "There probably should be a ~central bank,' if you will."

On the other hand, John G. Martinez, executive director of the New York State Housing Finance Agency, said existing financing conduits should be fully tested before resorting to creating a new entity.

"We should be looking at using the existing structures and give them a chance to solve the problem," Mr. Martinez said. "Why are we duplicating them? I get nervous when people think you solve problems by throwing money at them."

The legislation, entitled the Residential Home Builders and Small Business Credit Availability Act, also would serve small businesses, with loans being limited to $10 million each, Mr. Fitzpatrick said.

Rep. Hunter's district includes San Diego County, where median home prices are, at $195,000, about twice the national average, according to the most recent survey by the Greater San Diego Chamber of Commerce.

Mr. Martinez said providing "technical assistance" to an enterprise would be plausible, but that a larger challenge is to address the inability of today's buyers to qualify in the first place, such as through lease-purchase programs.

"The real issue is finding ways for people to access home ownership, rather than getting the homes built," Mr. Martinez said.

Peter Fugiel, vice president of research at John Nuveen & Sons Inc., said the entity may prove beneficial to tax-exempt volume.

"If it really is an attempt to get loans to small builders, that's very exciting," Mr. Fugiel said. "That's what's been missing in the economy since the S&Ls went under - funding smaller, middle-market builders who aren't capitalized enough to go elsewhere.

"It would enhance [tax-exempt] volume because it would put the municipal programs in tandem with real production," he suggested. "We would be able to place more money."

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