BEFORE THE housing market meltdown, the Federal Housing Administration was a pokey little agency with a limited mission — insuring mortgages with low down payments for a limited segment of humble but relatively creditworthy home buyers. The idea was to encourage homeownership by directing capital to a low-income market segment that could not attract it otherwise.

Since the crisis, Congress and the last two administrations have used the FHA to prop up housing more broadly, so much so that the agency’s portfolio exceeds $1 trillion and it backs about one of every three purchases of new homes.

Expanding the FHA poses long-term dangers. The agency’s latest independent audit reports it has only $2.6 billion in cash reserves, creating a near-50 percent chance that it will need a bailout if housing prices plunge again next year.

So why did Congress pass a law that extends the higher FHA loan limits, and why did President Obama sign it Friday morning? Well, there’s real estate, and people who sell it, in every congressional district. The real estate lobby, and its supporters in both parties on Capitol Hill, tucked this profoundly unwise measure into a must-pass appropriations bill that included funds to keep the government running through Dec. 16. Administration officials protested, but given the bill’s importance, Mr. Obama did not go to the mat.