President Barack Obama will use a campaign stop for Senate Majority Leader Harry Reid on Friday to announce a new initiative to help support homeowners in five states hit hardest by the U.S. housing crisis.
A senior administration official said Obama would announce he is designating $1.5 billion from the Troubled Asset Relief Program to fund programs at local Housing Finance Agencies in California, Florida, Nevada, Arizona, and Michigan.
Those states have seen declines in their housing markets of 20 percent or more from their peaks, the official said.
We are extremely cognizant of just how difficult the housing situation remains, the official told a conference call with reporters.
But (we are) very relieved that we are in a dramatically different place today where we have very significant stabilization in prices across most of the country.
Nevada is still struggling from the nation's housing troubles, and Obama's choice to make the announcement there was no coincidence.
The president is trying to boost the political prospects of Reid, a Nevada Democrat who is trailing potential Republican opponents by double digits in opinion polls ahead of November elections that could change the balance of power in Congress.
Reid has been instrumental in pushing Obama's main agenda items to boost the economy, overhaul the U.S. healthcare system and fight climate change, but Republican critics say he has neglected his home state while working on the national stage.
Obama's housing announcement may not be enough to change Reid's fortunes or the state's housing problems.
The administration official acknowledged that $1.5 billion was a small number compared to the scope of the problem, but said the administration was encouraged by progress nationwide.
We're encouraged by the market futures, the housing price futures that sort of suggest a very different view of the future of housing than we had a year ago, the official said.
The $1.5 billion would be distributed to the state agencies based on which states were suffering the most and could go to programs to help unemployed homeowners, for example, or borrowers who owe more on their houses than they are worth.
We want this to be a fund that in effect amplifies the things that are working well and gives license for more innovation, the official said, adding the five states had strong HFAs that could absorb the money well.
The official said the program was different and in addition to the Treasury Department's recent $23 billion program for all 50 state Housing Finance Agencies.
(Additional reporting by David Alexander in Washington, editing by Anthony Boadle)