That level changes each year and varies depending on housing costs in each county, with a maximum loan limit now of $312,895 in communities where housing is most expensive and a national average of $244,000, according to the housing administration.

In his letter, Mr. Kemp announced a management overhaul for the housing administration, called "F.H.A. for the 90's," which includes annual audited financial statements and review of various accounting and regulatory systems.

Walter E. Fauntroy, a liberal Democrat from Washington, D.C., singled out his enthusiasm, "a welcome change from the rather dour housing administration of the past eight years."

"That's something we're looking at right now," said Brian Montgomery, commissioner of the housing administration.

Unlike other federal assistance programs that have resulted in huge backlogs and long delays, the housing administration's program will work through the banks and other lending institutions that made the original mortgages; they will contact eligible homeowners and will file claims with the agency.

Mr. Jolly, who had no previous experience in public housing administration, is now serving as the agency's interim executive director until the position is filled.

The measure had set off sharp debate on the Senate floor, where opponents argued that the housing administration is already financially burdened and does not need additional risks.

A recent General Accounting Office report said that the stability of the housing administration's hospital program is at risk because more than 80 percent of its hospital business is in New York.

As a Government-controlled corporation within the department, Federal officials say, the housing administration could operate with the efficiency of a private business.

H.U.D. foreclosed on many of those homes, whose mortgages had been insured by the housing administration.