WASHINGTON - Fannie Mae and Freddie Mac must resume their purchases of tax-exempt housing bonds to jump-start that virtually dead market so state and local housing agencies can utilize $11 billion of additional private-activity bond volume cap that Congress provided earlier this year, local government and housing groups warned federal regulators and lawmakers.

"Today ... there is virtually no market for tax-exempt housing bonds because of the current economic crisis," said a letter from the National Association of Counties, the National Association of Local Housing Finance Agencies, the National Community Development Association, and the U.S. Conference of Mayors. The letter was sent late Monday to Treasury Secretary Henry Paulson, Federal Housing Finance Agency director James Lockhart, who oversees Fannie and Freddie, as well as the chairmen of congressional committees with jurisdiction over housing.

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