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by CareyBot

As lawmakers debate whether to increase the conforming loan limit to allow Fannie Mae and Freddie Mac to purchase more loans, regulators who oversee the government-sponsored entities are making plans to reduce the limit in 2009 in conjunction with falling housing prices. The Office of Federal Housing Enterprise Oversight today said its previous plan to leave the conforming loan limit unchanged at $417,000 in 2008 stands, regardless of how steeply home prices fall this year. But if cumulative home-price declines in 2006, 2007 and 2008 exceed 3 percent, the limit should be adjusted accordingly, OFHEO said. Previously, the regulator of Fannie and Freddie had proposed setting the threshold for a downward adjustment at a 1 percent price decline over three years. Industry groups representing le...