US Rep. Frank seeks to broaden mortgage program.

Byline: Susan Milligan

Dec. 4--WASHINGTON -- Democrats plan to use their new majority status in Congress to expand the mortgage market for tens of thousands of home buyers in Massachusetts and other states where high housing prices are limiting use of federally regulated mortgage programs, according to Capitol Hill lawmakers.

Representative Barney Frank, a Newton Democrat set to become the chairman of the House Financial Services Committee in January, said he will aggressively push legislation to ease current restrictions on the amount of a mortgage that can be held by Fannie Mae and Freddie Mac, two private mortgage companies chartered by the federal government.

Current law sets a limit -- currently at $417,000 -- on the maximum amount of a housing loan held by Fannie Mae and Freddie Mac. But because home prices in Massachusetts are comparatively high, relatively few buyers can benefit from the programs, housing advocates said.

Frank said he will use his power as chairman to seek a change in the law to correlate the mortgage cap to the price of housing in an area, instead of a flat limit that now applies to all areas of the country.

The current rules "keep them from doing luxury housing in Nebraska," but severely limit opportunities for what would be considered middle-income homebuyers in Massachusetts, Frank said.

Senator Charles E. Schumer, a New York Democrat and a member of the Banking, Housing , and Urban Affairs Committee, will fight to include a similar provision on the Senate side, said Eric Schultz, his spokesman.