Housing industry groups are questioning the Office of Federal Housing Enterprise Oversight's authority to reduce the conforming loan limit in urging the regulator to withdraw a proposal that might lead to a 2009 decline in the loan limit."OFHEO's proposal ignores current law relating to the loan limit adjustment, which does not provide for a decline in the CLL," the National Association of Home Builders says in a letter to the regulator. The NAHB, the Mortgage Bankers Association, the American Financial Services Association, the Consumer Mortgage Coalition, the Financial Services Roundtable, and Freddie Mac contend that the mortgage market would be better served by leaving the conforming loan limit at $417,000 and netting out any declines in house prices against a future increase in the limit. Fannie Mae and Freddie Mac cannot purchase mortgages with a loan amount above the CLL, which is adjusted annually based on a housing price index. Considering the disruption the proposal would cause, "the utility of decreasing the ceiling is not worth the cost," the AFSA, the CMC, and the FSR say in a joint letter.

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