Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev., issued the following statement regarding the need for Congress to pass legislation to reinstate the higher loan limits for the Federal Housing Administration that expired on Sept. 30:

"Legislation pending in the House and Senate will restore the higher mortgage loan limits for the Federal Housing Administration and is essential to help stabilize the nation's housing financial markets.

"The FHA program is fully self-supporting, and a great example of a public-private partnership with lending institutions. Restoring the loan limits will provide millions of potential consumers in markets throughout the nation access to safe, affordable mortgage financing.

"To help mend the struggling housing market, stabilize home values, provide constancy while private investors re-enter the market and ensure that millions of creditworthy home borrowers can access the best possible mortgage rates, Congress must support this bill to help American families and get the lackluster economy moving forward."

Michael W. Young, Chairman of the Mortgage Bankers Association (MBA), issued the following statement today reacting to the release of the FHA actuarial report on the Mutual Mortgage Insurance (MMI) Fund for single family programs.

"It is clear that the persistent troubles in the economy and real estate markets are continuing to impact FHA's financial reserves, and given FHA's mission of providing access to mortgage credit to lower income and first time homebuyers, it should be of little surprise that its reserves are being stressed.

"That FHA continues to remain net-positive is a testament to the numerous credit policy and operational changes implemented over the last couple of years to stabilize the fund, while the agency has played a larger role than ever as one of the few guarantors of mortgage credit for millions of homebuyers across America.

"FHA plays an important countercyclical role in the housing market, with its greatest contributions coming during those times of market stress, like those we have seen in recent years. Without FHA's support, our housing market would be in far worse shape than it is today."

We don't have specifics, but hear that updated guidelines may be posted to Freddie's website late this afternoon in lieu of an official press release or announcement by FHFA. We'd assume Fannie would follow suit but haven't heard official details. A time of 4pm has been mentioned by several sources now, but no guarantees.

Stocks have been on somewhat of a tear since just before noon when Italy's new PM announced that a new cabinet could be named as early as tomorrow. There was also some stock-friendly talk from Greece's Finance Minister regarding how fast and awesome he wants Greece to be in terms of going through whatever motions are necessary to secure aid tranches or some such thing...

It's all getting a bit tiresome... Stocks continued to rally despite the Euro leveling off, and Treasury yields followed (and remain elevated at 2.055). Although MBS have bounced back in a big way (still 2 ticks in the green at 101-20), this does cloud the reprice outlook somewhat. Most likely, chances of reprices for the better are gone, and until the impressive support bounce at 101-16, we'd have said that reprices for the worse were a more pronounced risk, but the bottom line is that at 101-20, Fannie 3.5's are essentially in their 101-19 to 101-23 range that dominated the AM hours. A lender or two might be spooked enough by the spike that a reprice for the worse slips through the cracks, but that's a more justifiable move if Fannie 3.5's sustain a move under 101-19 for more than a few minutes. Take a moment to set your alert levels accordingly, and let us know if you have any questions on how to do so.

(Reuters) - Republicans and Democrats in the U.S. Congress on Monday agreed on a measure that would increase the maximum size of mortgage loans that can be insured by the Federal Housing Administration, a key funding source for U.S. home loans.

The measure to raise the loan limits backed by the FHA still has to pass the Republican-led house and Democrat-controlled Senate before it becomes law, but the agreement by a bipartisan panel of lawmakers from both chambers indicates a strong likelihood of final approval.

The limits, which vary by real-estate markets, fell at the end of September for mortgages insured by the FHA, as well as government-controlled Fannie Mae and Freddie Mac . The higher loan limit was temporarily raised for Fannie, Freddie and the FHA during the financial crisis and it automatically dropped back to $625,500 on Oct. 1.

The agreement reached among House and Senate leaders excludes those loans guaranteed by Fannie and Freddie, which provide about half of the funding of all U.S. residential home loans. The deal would only impact FHA's loan limits, restoring the cap for mortgages the government insures to as high as $729,750 in high-cost real estate markets through 2013.

The agreement follows a polarizing debate over the size of mortgages the federal government should back. The measure to increase the legal limits on the size of mortgages the FHA can insure was included in a bill to fund a large swath of government programs, from food inspection to law enforcement, that is seen as must-pass legislation for many lawmakers.

The legislation containing the amendment extends funding on a temporary basis for many government programs through Dec. 16, giving Congress additional time to finalize funding levels.

The House and the Senate must pass the bill by Nov. 18, when current funding expires.

*RTRS - FED'S WILLIAMS-IF INFLATION TRENDS BELOW 2 PCT, THE BENEFITS OF FURTHER ACCOMMODATION ARE PRETTY CLEAR

*RTRS - WILLIAMS- WILL WANT TO SEE MORE DATA CONFIRMING THAT INFLATION WILL COME DOWN, STAY LOW BEFORE ADDING MORE STIMULUS

*RTRS - WILLIAMS-WOULD LIKE TO SEE FULLER FED ROADMAP FOR POLICY, INCLUDING INFLATION GOAL, OUTLOOK ON UNEMPLOYMENT-RATE TRAJECTORY, GDP GROWTH RATE

*RTRS - WILLIAMS-FED POLICY ROADMAP WOULD IDEALLY ALSO GIVE SCENARIOS FOR DIFFERENT RISKS, LIKE EUROPE

*RTRS - WILLIAMS- IT IS VERY IMPORTANT TO KEEP INFLATION FROM FALLING TOO LOW

*RTRS - WILLIAMS-IF FED DECIDES TO BUY BONDS, MORTGAGE-BACKED SECURITIES WOULD GIVE EXTRA KICK

Fannie 3.5's have traded a range mostly between 101-19 and 101-23 all morning but currently sit just outside the high end of that range. meanwhile, stocks are selling and 10yr yields trade under 2% for the first time today. This is a situation where some of the early algorithmically motivated lenders could reprice for the better. The longer that 101-23 is sustained as a floor the more likely positive reprices would be. But do keep in mind that the range is relatively narrow so the fact that the line on the chart is near the top doesn't indicate quite as much ground has been covered as it normally would over the course of two days. For what it's worth, the rally is Euro-driven.