Obama unveils new housing plan

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President Obama on Friday proposed a $1.5-billion program to support homeowners in five states hit hard during the housing crisis, including Nevada where the president is campaigning for Senate Majority Leader Harry Reid.

The program will use money from the Troubled Asset Relief Program to fund programs at state housing finance agencies. In addition to Nevada, California, Florida, Arizona and Michigan were chosen because their housing markets have declined at least 20%.

In a briefing paper, the White House said that housing prices have begun to stabilize but “the legacy of price declines, together with the effects of high unemployment, means that many working- and middle-class families in these especially hard-hit areas are facing serious challenges, in many cases beyond what their families’ resources can handle.”

Obama will discuss the program during a town hall-style appearance in Henderson, Nev. On Thursday, Obama campaigned in Colorado during a brief Western political swing.

Reid is facing an especially difficult race this year. Polls show him trailing possible opponents by double digits.

The $1.5 billion would go to states whose housing agencies could determine how it will be distributed. The funds could go to unemployed borrowers, underwater borrowers and second liens, the White House said.

-- Michael Muskal

Twitter.com/LATimesmuskal