Governors press Treasury Dept for housing help

WASHINGTON (Reuters) - U.S. governors on Wednesday pressed the Treasury Department to help housing finance agencies access capital, saying in a letter that problems with housing bonds could subvert the federal government's goals of helping Americans afford housing.

In the letter to Treasury Secretary Timothy Geithner, the National Governors Association said that housing finance agencies have had "difficulties accessing capital markets and have seen a loss of liquidity that makes remarketing bonds expensive."

That provides fewer funds for the agencies to lend to first-time home buyers and some agencies have shut down their programs altogether, the association also said.

The governors asked the Treasury to establish a liquidity facility for variable rate housing bonds. They also requested that Fannie Mae and Freddie Mac, the mortgage giants under federal conservatorship, buy housing bonds at favorable interest rates to help keep the cost of borrowing low.

The letter was signed by Pennsylvania's Edward Rendell, Vermont's James Douglas, New Jersey's Jon Corzine and South Dakota's Michael Rounds.

Corzine first suggested having Fannie Mae and Freddie Mac buy housing bonds in February and in March a Treasury official said the department was working out the details of a support program.

(Reporting by Lisa Lambert)