(Bloomberg News) Colorado's San Miguel County is known as a winter playground with world-class skiing and mountain vistas, a place where homes can sell for millions of dollars.
If you'd like to buy, the Federal Housing Administration -- the agency created to aid low-income and first-time homebuyers - - can help. Not far from the ski resorts of Telluride, an FHA- approved borrower can pick up a five-bedroom, four-bath house with stainless steel appliances and a two-car garage for about $600,000.
The agency, created during the Great Depression, has found itself insuring high-dollar loans in hundreds of counties across the country, from New Jersey to Florida to Arizona. Such loans are drawing renewed scrutiny as lawmakers debate whether to expand FHA lending to even wealthier borrowers.
"It's not the intent of the FHA to facilitate people buying McMansions," said Representative Scott Garrett, a New Jersey Republican opposed to higher loan limits. "The intent is to help the average American buy the average house."
Congress is weighing a proposal to restore higher loan limits that expired on Oct. 1. The measure, already adopted by the Senate, would allow the FHA and government-controlled Fannie Mae and Freddie Mac to insure single-family mortgages for as much as $729,750, up from the current $625,500, in high-cost parts of the country.
Lawmakers who back the higher limits are concerned that any withdrawal of federal support could undermine the frail housing market. They are taking their case to House and Senate appropriators, who are meeting in private this week to hash out details of a $182 billion spending bill that includes the mortgage provision.
"We had hundreds of counties across 42 states that found themselves with lower loan limits," said Senator Robert Menendez, a New Jersey Democrat who co-sponsored the amendment adopted in the Senate. "When you see Realtors, homebuilders and mortgage bankers all come together and say this is one of the most important things to do, it's significant."
Those groups have mounted an intense lobbying campaign in the past two weeks, boosted by discouraging housing indicators. Home prices fell 4.1 percent in September from a year earlier, according to data provider CoreLogic LLP, based in Santa Ana, California. The coalition includes the National Association of Realtors, the National League of Cities and the Mortgage Bankers Association headed by former FHA Commissioner David Stevens.
"We urge you to do no harm," the coalition wrote in a Nov. 3 letter to lawmakers. "Do not precipitate more turmoil in local markets."