WASHINGTON (8/8/11)--A bill introduced last week would allow the Federal Housing Administration (FHA), Fannie Mae, Freddie Mac, and the Veterans Administration (VA) to guarantee mortgages up to $729,750, or 125% of local median prices for single family homes, through Dec. 31, 2013. Congress increased the loan limit for the FHA, Fannie, Freddie and the VA to its current amount in 2008. This extension is set to expire for the FHA, Fannie Mae and Freddie Mac on Sept. 30 and for the VA on Dec. 31. The new legislation is known as the Homeownership Affordability Act of 2011 and introduced by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.). The bill is also co-sponsored by Sen. Dianne Feinstein (D-Calif.). A recent release said that if the higher limit is not extended, loans would be affected in 669 counties across 42 states, reducing loan limits by an average of more than $68,000 per county. The maximum guaranteed loan amountwould drop to $625,500, or 115% of local median home prices, the release added. “Allowing these limits to expire would be bad medicine for our economy at a time when we need a booster shot,” Menendez said. Isakson said he is “concerned that failing to extend these limits would make it even more difficult for the average homebuyer get a mortgage and buy a home when credit is already tight.” Members of Congress are scheduled to return to Washington when the August recess ends on Sept. 6.