Conservatives line up against letting government guarantee more mortgages

Conservatives are opposing efforts to increase the size of mortgages the government can guarantee, making it one of the more contentious issues to be dealt with as part of an upcoming spending bill agreement.

The Senate has approved legislation that would increase the so-called "conforming loan limits," but as lawmakers come together via conference to craft a spending "minibus" package, conservative groups are pushing hard to keep it out of that measure.

The Club for Growth announced Thursday it was urging members to vote "no" on an upcoming spending package if it included the higher loan limits, which previously had been in place but expired at the beginning of October. It said it planned on scoring it as a key vote for its 2011 congressional scorecard.

And the The Wall Street Journal editorial board blasted efforts to reinstate the higher limits on its pages Thursday, dismissing it as a "realtor subsidy."

Other conservative groups, including Americans for Tax Reform and Heritage Action for America, joined the Club for Growth in sending a letter to lawmakers Wednesday criticizing the higher limits as part of the government's "overwhelming and inefficient mortgage subsidies."

Housing advocates argue that the higher limits provide a much needed boost to the ailing housing market, as it allows the government to guarantee a larger amount of mortgages, making them more affordable. As the housing sector weighs heavily on the slow economic recovery, they argue help for that market is sorely needed.

But critics of the higher limits, including several prominent House Republicans, oppose it because they are looking to reduce the government's outsized role in the housing market, not expand it. By gradually lowering those loan limits, the government can exit the housing market and allow the private sector to step in and take its place, they argue.

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