When it comes to housing, El Presidente wants to go out with a bang!

Besides boosting the Department of Housing and Urban Development's budget authority by 23 percent, Bill Clinton's budget proposal for fiscal 2001, which begins Oct. 1, calls for an increase in the Federal Housing Administration loan limit and for an expansion of the FHA-insured loan program to cover medium-term adjustable-rate mortgages.

In his final budget, the President wants to raise the FHA loan limit to $252,700, the same ceiling that's imposed on Fannie Mae and Freddie Mac. "Raising the FHA loan limit to 100 percent of the Fannie Mae/Freddie Mac conforming limit will help approximately 55,000 families purchase their first homes," the budget says.

The current FHA ceiling is $219,849 in high-cost areas. The increase would be particularly helpful to large families, the White House claims.

Fannie Mae and Freddie Mac are secondary mortgage market institutions which bring liquidity to the primary market by purchasing loans from local lenders and selling them to investors throughout the world. By law, the two government-sponsored enterprises cannot buy loans any larger than $252,700.

Clinton's last hurrah also asks Congress to allow the FHA to back so-called "hybrid" ARMs which have rates that are fixed for somewhat longer periods before they begin changing to meet current market conditions. Currently, the FHA can insure only one-year adjustables.

Hybrids, which have fixed terms for three, five, seven and sometimes even ten years, are more popular than one-year ARMs because they give borrowers more breathing room before rates start adjusting. Also, they are ideal for people who will remain in their houses and therefore keep their loans for certain periods.

While neither proposal should cost the government any money the FHA insurance fund is one of the few federal programs that run in the black, actually making money for the Treasury the rest of the budget for HUD calls for a $6 billion increase is budget authority, to $32.1 billion.

That, says Sec. Andrew Cuomo, is "the strongest HUD budget in more than 20 years," with increases in practically every program area. Actual budget outlays, though, would increase by just 7.3 percent.

Among other things, the Clinton Administration wants to:

Published: February 9, 2000

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