WASHINGTON - The Department of Housing and Urban Development on Thursday asked Freddie Mac to reconsider its decision not to lower the maximum size of the home loans it buys despite a 3% drop in housing prices.

On Tuesday, after the price index traditionally used to set the purchase ceiling was released, Freddie Mac said it would retain its $203,150 limit. Fannie Mae said it leaning toward the same decision but wanted to study the issue further.

With a decline in prices, the current ceiling would effectively broaden the pool of loans eligible to be sold to the mortgage agencies, increasing their influence in the secondary market.

In a statement released Thursday, HUD secretary Henry G. Cisneros said: "When the house price index moves up, as it has in 12 of the 13 years the enterprises have been required to use it, Fannie Mae and Freddie Mac have increased their conforming loan limits. And when it moves down, as it has this year, they should reduce their loan limits."

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