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House Boosts FHA Loan Cap, Retains 41 Pet Projects

October 26, 1989

WASHINGTON (AP) _ Larger home loans backed by the Federal Housing Administration would be available in many of the nation’s most expensive housing markets under legislation passed by the House.

By voice vote Wednesday, lawmakers agreed to raise the $101,250 limit on the size of mortgages the FHA can insure to $124,875.

Supporters said the higher ceiling would help people buy costlier homes, while opponents argued it would expose the government to steeper losses if the borrowers default.

The median price of homes already exceeds $101,250 in 18 states and Washington, D.C., the National Association of Home Builders says.

Jane DeMarines, spokeswoman for the Mortgage Bankers Association, estimated 100,000 new home loans could be made in 76 cities under the bill.

The $67 billion housing, development, veterans and space program bill containing the loan cap returns to the Senate, which approved the FHA language last month and is expected to do so again.

The legislation also contains money to finance a New Jersey arts center, a Michigan library and 39 other pet projects that lawmakers voted to retain despite opponents’ arguments that the distribution of the money smacks of favoritism.

Opponents complained that the projects, worth $28.4 million, were largely spread among the congressional districts of members of the House Appropriations Committee, which produced the legislation.

They said that none had been approved by the Department of Housing and Urban Development, from whose coffers the money would come. But opponents lost an attempt to strip the projects from a housing and development bill on a 250-170 vote.

The money for the 41 pet projects would come from a fund the secretary of housing uses to distribute money at his discretion for community development programs. Included in the legislation was $1.2 million for a Newark, N.J., performing arts center, $180,000 for a bridge in Leake County, Miss., and $390,000 for a library and recreation center in Mackinac Island, Mich.

Opponents compared the method of the projects’ selection to former HUD officials accused of awarding funds to proposals backed by political cronies.

″The only thing the projects have in common is they either have someone on the committee, or someone to ask for it,″ said Rep. Steve Bartlett, R-Texas, who led the effort to strip the funds.

Supporters said Congress had as much right as administration officials to decide how funds are spent, accusing opponents of sour grapes.

″I guess what this proves is if a project is in your district, it’s a vitally needed project,″ said Rep. William Green, R-N.Y. ″If it’s in a neighbor’s district, it’s pork.″

The overall bill, a compromise between previous House and Senate versions, was approved 363-53 Tuesday in the first day of debate on the measure. Under special rules, disputed provisions were considered after the rest of the legislation was approved.

The bill provides $12.4 billion for NASA, including $1.8 billion for the planned space station. It also makes available $5.6 billion for the Environmental Protection Agency, $11.4 billion for veterans’ medical care, and $15.1 billion for housing programs.

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