SAN FRANCISCO - Frozen out of the capital markets in recent weeks, state and local housing finance agencies are being forced to curtail lending to low- and moderate-income homebuyers at the worst possible time for the broader economy.

Housing finance agencies in California and across the nation long seemed to have dodged the worst of the housing market's woes. While they lend to many first-time homebuyers with small down payments, HFAs avoided the sort of undocumented, negative-amortizing, infinitesimal credit score lending that brought down the nation's big subprime lenders. That doesn't mean they're immune to the fallout.

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