San Francisco - The five states where the housing crisis has taken the biggest toll will receive part of a $1.5 billion federal aid package intended to slow the tide of home foreclosures, the Obama administration announced Friday.
The money will be distributed to housing agencies in California, Nevada, Florida, Michigan, and Arizona – states where home prices have dropped more than 20 percent since the peak of the market, in a bid to help keep struggling homeowners in their houses.
"The goal is to target communities at the center of the crisis, and to empower local agencies who know these communities best to structure and tailor their programs in ways that are most responsive," said President Obama in a speech Friday to the Las Vegas Chamber of Commerce.
The president announced the aid package earlier in the day at a town hall meeting in Henderson, Nev., a city next to Las Vegas that is struggling amid the foreclosure crisis.
Obama was in Las Vegas to campaign for Senate Majority Leader Harry Reid (D) of Nevada who is up for reelection in November and whose poll ratings have plummeted recently, in part because of the dire economic situation in Nevada. The state has the highest rate of foreclosures in the nation and about 65 percent of its homeowners are upside down on their mortgages.
Obama looks to states for creative solutions
Federal officials say the aid package, which will be taken from the $700 billion Troubled Asset Relief Program (TARP), will be distributed to states based on a formula that will also consider unemployment numbers. The money could possibly fund programs to assist out-of-work homeowners or provide mortgage relief to owners with negative equity. The administration is looking to states to come up with creative solutions to the crisis in their bid for part of the funding.