Although exact details are lacking on the mortgage relief provisions of the economic stimulus package, we do know policymakers plan to use the FHA, Freddie Mac and Fannie Mae to pump life into the housing market.

Congressional leaders and the Bush administration shared parts of a mortgage relief plan Thursday that will increase loan limits for the Federal Housing Administration (FHA), as well as government-sponsored entities Freddie Mac and Fannie Mae.

Policymakers want the FHA, which was originally started to help first-time and low-income homebuyers, to be allowed to help struggling borrowers who are facing default. The plan will also allow the FHA to insure loans up to $730,000, according to House Speaker Nancy Pelosi. This is nearly double the current limit of $367,000.

The current loan limit for Freddie Mac and Fannie Mae is $417,000. There are conflicting reports in regards to how much these limits will change. Pelosi reported the companies will be able to buy or guarantee mortgages up to $729,750 (up to 125 percent of the area’s median home price) in cities with high-cost homes. A news release from House Leader John Boehner says the cap is $625,000.

The change to the FHA is expected to be made permanent, but the increase on Freddie Mac and Fannie Mae’s conforming loan limits would expire after December 31 of 2008. The only way it would continue is if Congress makes the choice to extend it.

What is still up in the air is how high-cost areas will be defined. The current assumption is that data will be used from the National Association of Realtors (NAR) or the Federal Housing Finance Board.

Details aside, there is still a chance the provisions will face opposition from senators, some of whom are against expanding the role of the FHA and the two mortgage companies. All three of the organizations have a huge role already and have had problems in the past because of it.

By its own estimates, FHA will be operating in the red this year. Freddie Mac and Fannie Mae were both deeply in the red during the third quarter of last year and are expected to announce more write downs in the coming weeks.

Lawmakers who are for the changes are suggesting more regulation for the FHA, Freddie and Fannie as a way of compromise. The outcome of this regulation will most likely be dependent on how fast the long-stalled legislation can move.

Select Metro Areas That Will Benefit From Higher Conforming Loan Limits

The Stanford Group Company, a financial services company, estimates the proposed changes to conforming loan limits would have a significant impact on 19 major metropolitan areas.

• Anaheim-Santa Ana, Calif. (proposed limit $729,750)
• Barnstable Town, Mass. (proposed limit $500,750)  
• Boston-Cambridge-Quincy, Mass. (proposed limit $518,375) 
• Boulder Colo. (proposed limit $459,375) 
• Bridgeport-Stamford-Norwalk, Conn. (proposed limit $613,875)  
• Los Angeles-Long Beach-Santa Ana, Calif. (proposed limit $729,750) 
• Miami-Fort Lauderdale-Miami Beach, Fla. (proposed limit $433,500)
• New York-Northern N.J.-Long Island, N.Y./N.J. (proposed limit $595,125)
• New York-Wayne-White Plains, N.Y. (proposed limit $688,625) 
• Edison, N.J. (proposed limit $489,750) 
• Nassau-Suffolk, N.Y. (proposed limit $587,500) 
• Newark-Union, N.J./Pa. (proposed limit $574,625)
• Riverside-San Bernardino-Ontario, Calif. (proposed limit $471,250) 
• Sacramento-Arden-Arcade-Roseville, Calif. (proposed limit $419,625) 
• San Diego-Carlsbad-San Marcos, Calif. (proposed limit $729,750)  
• San Francisco-Oakland-Fremont, Calif. (proposed limit $729,750) 
• San Jose-Sunnyvale-Santa Clara, Calif. (proposed limit $729,750)  
• Seattle-Tacoma-Bellevue, Wash.  $394,700 (proposed limit $76,375) 
• Washington-Arlington-Alexandria Va./Md. (proposed limit $547,500)   

(Note: Stanford’s estimates are based on median home price data from the National Association of Realtors.)