WASHINGTON - The Western League of Savings Institutions, which represents the large California thrifts, is trying to bring some pressure on Freddie Mac, which has announced it will raise its loan limit to $207,000 next year.

In a letter to the California, Arizona, and Nevada congressional delegations, the trade group said its members would unfairly lose $1.6 billion in business to Freddie Mac in 1996 if the loan limit goes up.

"There is no policy justification for Freddie Mac's decision," because Freddie Mac, and Fannie Mae, did not lower their loan limits in 1993 and 1994, to match decreases in the housing price index maintained by the Federal Housing Finance Board, said Lou Nevins, head of the Western League.

Fannie Mae has said it will maintain its ceiling at the current $203,150, though observers believe that separate ceilings for the two agencies are unlikely.

In its letter, the Western League said that with Freddie's action, "the ceiling will soon bear no resemblance to housing prices, a result we doubt Congress intends."

In California, the agencies are already capturing an ever-increasing share of the market, because their ceilings have remained constant even as house prices have fallen by as much as 10%, the trade group said.

"We hope you agree with us that at a time when the Congress is facing horrendous choices with respect to cuts in worthwhile federal programs that it is not necessary to provide a mortgage interest rate subsidy to families earning six-figure incomes," the letter said.

TRW Redi Property Data estimates that Freddie Mac will be able to purchase $1.6 billion in additional mortgages in California if it raises its ceiling to $207,000. Nationwide, TRW estimates, that number will be $6 billion. The Mortgage Bankers Association estimates that $3 billion of additional loans will be available to Freddie Mac with the higher limit.

Sources said last week that Fannie Mae does not want to reverse its decision to maintain its limit at $203,150, and is looking at ways that Freddie Mac can be persuaded to change its mind.

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