Sadly, housing prices have risen so fast in some particularly robust urban markets that millions of middle-income people again are being priced out of the market.

Public servants like teachers, police officers, librarians and nurses often find they can't afford to live in vibrant cities like San Francisco, where the median home price has soared to $689,000, or New York City, where it's climbed to $435,000.

Fortunately, the housing reform bill passed by the House helps alleviate that problem by allowing Fannie and Freddie to take into account the difference in housing costs from one area to another.

The House bill raises Fannie and Freddie's loan limits from a current cap of $359,650 to as much as 150 percent above median housing prices — increasing the size of mortgages available in the hottest markets to well above $500,000.

It also gives a helping hand to needier Americans by allotting 5 percent of Fannie and Freddie's annual profits for preservation, rehab and construction of affordable housing. That set-aside will provide up to $1 billion annually to meet a burgeoning demand for affordable housing that has now reached 1.6 million units.

As the full House and the Senate edge closer to enacting housing finance reforms, lawmakers should be careful to strike a proper balance between the many competing interests. To my mind, that means providing stronger regulatory oversight without handcuffing Fannie and Freddie as they go about their main mission of helping all Americans achieve homeownership.

As we enter an era of unprecedented demand for housing coupled with skyrocketing prices, an increasing number of homebuyers are scrambling for new forms of innovative financing.

Fannie and Freddie have responded well to such needs in the recent past, and they can do so again if Congress pursues reasonable and responsible reforms rather than allowing itself to be panicked into major and, in my judgment, unnecessary surgery.

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A three-term Republican senator from Utah, Jake Garn is a former chairman of the Senate Committee on Banking, Housing and Urban Affairs.