Good news! In a compromise negotiated Tuesday, Congress agreed to restore the $729,750 conforming loan limit for FHA mortgages.
Some purchasers prefer FHA to Fannie and Freddie and some the opposite, but virtually every transaction that would have closed as a Fannie or Freddie loan can now close as an FHA loan.
FHA allows for a lower down payment, and restoring the high balance loan limit for FHA probably does more to provide a vehicle for all types of home buyers than anything else. The extension will continue until December 31, 2013 and applies to high cost areas including all of Los Angeles and Orange County. (Still requires a vote.)