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By Damian Paletta
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)–U.S. House Financial Services Committee Chairman Barney Frank said Tuesday an amendment he plans to offer next week would raise the limit on the size of loans that could be insured by the U.S. Federal Housing Administration, with a provision that would allow more growth based on market conditions.
The amendment, which would likely pass, would be attached to a broad reform bill that aims to give the Federal Housing Administration more flexibility to insure riskier mortgages. FHA is a division of the U.S. Department of Housing and Urban Development.
Frank, D-Mass., said the amendment would raise the size of loans that could be insured by FHA “to $500,000 - that would be the base, and in addition to that it would give the HUD secretary the ability to raise it” if market conditions require such a adjustment.
Frank’s comments came during a meeting with reporters after his speech to the National Association of Federal Credit Unions.
Frank on Tuesday also urged Senate lawmakers to pass broad reform of the supervision of Fannie Mae and Freddie Mac. The House passed a bill earlier this year, and Frank said that stronger regulatory oversight for the companies might make the White House more comfortable with allowing the companies to buy larger mortgages and increase the size of their portfolios beyond strict limits.
“Beyond that, I do think the (Bush) administration would fight hard against raising the jumbo (limit) and increasing the portfolio in the context of the current regulation,” Frank said. “The best thing that would happen would be for the Senate to take up the whole (GSE reform) bill.”