ORLANDO, Fla. -- States must work to extend the reach of mortgage revenue bond programs by providing more funding and political support to housing finance agencies, lawmakers attending the National Conference of State Legislatures said last week.

"States absolutely must play a more important role in backing housing agencies, and that role can begin with the use of state dollars to help step down the interest rate available to home owners participating in tax-exempt mortgage bond programs offered by those agencies," said state Rep. Elizabeth Mitchell of Maine. "It only takes a small amount of state dollars to leverage a lot of these loans."

Speaking at a session on Thursday entitled "Who Pays for Housing," Rep. Mitchell said state housing trust funds provide an especially useful mechanism through which aid can be funneled to a housing agency. But she cautioned that such funds must be financed by a dependable source of revenue, and must be protected after being established.

"In hard times, legislators are going to be tempted to use this money to cover state deficits," said the Maine legislator, who is a former executive director of the Maine State Housing Authority.

She said that this year her own state's Legislature approved transferring to Maine's general fund a part of collections from the real estate transfer tax that finances the housing trust fund, as part of an effort to plug an anticipated deficit in fiscal 1992.

"This is a dangerous precedent," she said.

Kenneth C. Montague Jr., a delegate in Maryland's House of Representatives, said state legislators can help housing finance agencies make their lending programs more attractive to potential home buyers by soliciting -- and if necessary jawboning -- aid from private corporations.

"We have to begin to look to the private sector to take a greater role," he said. "And state lawmakers can play a role by reminding the private sector of its obligations." One of those obligations, he said, is compliance with the federal Community Reinvestment Act, which requires banks to invest in the communities in which they do business.

Both Ms. Mitchell and Mr. Montague also urged state legislators to pressure their congressional delegations in Washington to work to permanently extend the tax-exempt status of mortgage revenue bonds. Unless renewed by Congress, that tax exemption is set to expire Dec. 31.

"Each year we go to Washington and beg for the crumbs from the taxable," said Rep. Mitchell. "The uncertainty about the status of mortgage revenue bonds is very destructive and must be dealt with."

But while encouraging state legislators to take a more active role in supporting house finance agencies, Ms. Mitchell and Mr. Montague warned the lawmakers to avoid attempting to dictate the details of policy to state housing agencies.

"I warn you against micro-managing these agencies," Mr. Montague said. "They need the support, but they know best how to implement their policies."

Benson Roberts, the session's moderator, urged lawmakers to consider the community context of housing problems as they consider strategies to broaden the access to financial resources to meet those problems.

"If you do care about housing, you better care about the communities where low-income people live and where that low-income housing exists," said Mr. Roberts, director of policy and program development for Local Initiatives Support Corp., a nonprofit group seeking greater business involvement in local communities.

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