A $150 billion economic stimulus package overwhelmingly approved by the House of Representatives Tuesday would raise the conforming loan limit and the upper threshold for FHA loan guarantee programs to as much as $729,750 in high-cost areas — but only until the end of 2008.

The bill would also restrict Fannie Mae, Freddie Mac and the Federal Housing Administration from guaranteeing or purchasing loans above 125 percent of the median home price for a given area. That means that should the bill become law, the existing $417,000 conforming loan limit for mortgages eligible for purchase by Fannie and Freddie would not increase in areas where the median home price is $333,600 or less.

It would be up to the Secretary of Housing and Urban Development to determine the median home price for different housing markets “as soon as practicable,” but no later than 30 days after passage of the bill, relying on existing commercial data where needed.

The existing limit for Federal Housing Administration loan guarantee programs is $362,790. The higher limits for FHA loan guarantees are also set to expire at the end of the year, unless Congress passes other legislation intended to modernize FHA programs by introducing risk-based pricing and lowering down-payment requirements.

While House leaders thought they had reached an agreement with the Bush administration to include FHA modernization as part of the stimulus package, they agreed to continue working on that issue separately at the administration’s request, the Associated Press reported.

Passed in a 385-35 vote, HR 5140, the Recovery Rebates and Economic Stimulus for the American People Act of 2008, would provide tax rebates of $600 to $1,200 per family and about $50 billion in tax breaks for businesses.

The Senate is debating an economic stimulus bill of its own, which could come to a vote this week. While Sen. Richard Shelby, R-Ala., has advocated tighter oversight over Fannie Mae and Freddie Mac before increasing the conforming loan limit, it’s unclear whether opponents will be able to introduce amendments blocking the plan, which has the support of many Democrats (see Inman News story).

But the Bush administration has warned that the entire economic stimulus package could be derailed if the Senate attempts to add more programs to it.

Sen. Charles Schumer, D-N.Y., said Tuesday he will call for an additional $500 million in emergency foreclosure prevention measures in the stimulus plan, Reuters reported.

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