SAN FRANCISCO - The largest public housing finance agency in the country has stopped most mortgage lending and is working to deleverage its balance sheet to help it weather the sharpest housing downturn in its three decade history.

The California Housing Finance Agency's survival strategy shows how mutually reinforcing credit and economic crises can force even a public agency - whose mission is to lend and to help solve problems like the housing crisis - to curtail lending at the worst possible time for consumers and the economy.

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