UPDATE 2-California sues Fannie, Freddie over clean energy

* State says mortgage giants impeding clean energy program

* Says threatens jobs, growth, federal stimulus money

* Attorney general urges President Obama to intervene

* Fannie, Freddie contest senior status of program's loans (Adds lawsuit filed in U.S. court, letter to Obama, details)

By Dan Whitcomb

SAN DIEGO, Calif July 14 (Reuters) - California's attorney general sued U.S. mortgage giants Fannie Mae and Freddie Mac on Wednesday for blocking a home clean-energy program he says will create jobs and stimulate local economies.

The program, part of the $787 billion economic stimulus legislation last year, allows local governments to make loans to homeowners to cover the hefty upfront costs of installing solar panels and other energy-saving improvements.

Fannie Mae and Freddie Mac oppose the loans because the municipalities making them would repaid first if a property goes into foreclosure, before investors in mortgages securitized by Fannie and Freddie.

"Right in the middle of this recession, this program is being strangled by these massive behemoths Fannie Mae and Freddie Mac," California Attorney General Jerry Brown told reporters in San Diego.