>By Zachary A. Goldfarb and Brady Dennis
Washington Post Staff Writers
Friday, February 4, 2011; 12:08 AM
The Obama administration is likely to recommend reducing the size of mortgages eligible for government backing, according to current and former officials, a move that could make getting a home loan in high-priced areas such as the Washington region more expensive.
Administration officials, who are preparing a white paper on overhauling the nation’s housing finance system, are looking at scaling back the support provided during the mortgage crisis to help the ailing real estate market.
In the District and most of its neighboring counties, home buyers have benefited from a temporary federal policy that has allowed mortgages up to $729,750 to receive government backing. Such home loans typically carry lower interest rates than those without government support, because investors are attracted by the official guarantee.
The administration is now likely to suggest that Congress allow the policy to lapse as scheduled in September, lowering the loan limit to $625,500.
The proposal to let the higher limits lapse is among the most concrete elements in the long-awaited review, which examines various options for reshaping the role government plays in the mortgage finance market.
