Fannie like Freddie, won't cut loan limit.

WASHINGTON - Fannie Mae said Monday it would keep its loan limit for single-family houses at $203,150 next year despite a 3% drop in a key housing-price index to which the limits are linked.

The Federal Home Loan Mortgage Corp., known as Freddie Mac, had announced the same decision on Nov. 30. On the same date, Fannie Mae, formally the Federal National Mortgage Association, said it was leaning toward the maintaining of the loan limits but needed to study the issue further.

The company's recent announcement came shortly after the Department of Housing and Urban Development relented on the issue and said it did not have the authority to regulate the agencies' loan limits. Earlier, HUD Secretary Henry Cisneros had publicly urged the two companies to match the index and reduce their limits by $6,000.

Fannie Mae couched its own decision in terms of what would best for the nation's homeowners.

In a letter to key members of the House and Senate Banking Committees, Fannie Mae cited the "swift, strong and broad-based" response from mortgage bankers, real estate agents, home builders, and lawmakers that reducing the limits would harm homebuyers.

It said its own research found that trimming the limits would have a disproportionate impact on high-cost areas such as California, and suggested the move would hurt the weak California economy.

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