Obama to direct $1.5B from bailout to worst housing markets

President Barack Obama on Friday will direct $1.5 billion from the $700 billion financial bailout to help boost the hardest-hit housing markets in the country.

The announcement comes after Obama traveled earlier in the week to Nevada, home to one of the hardest-hit markets since the housing bubble burst. Obama traveled to the state to help boost embattled Senate Majority Leader Harry Reid (D-Nev.), who is locked in a tough reelection race with housing worries and broader economic troubles weighing heavily on his campaign.

The housing collapse sent the broader economy into a deep recession that began in December 2007 and led to massive losses in banks across the country.

The new program will be available to states that have seen home prices decline by at least 20 percent since their peak. The money would be directed to state housing agencies for programs aimed at helping unemployed homeowners stay in their homes and to support borrowers who owe more on their homes than the current value.

The Treasury Department will be in charge of vetting programs developed with the state agencies, the White House said.

Home prices hit a peak in the second quarter of 2006, according to the most recent S&P/Case-Shiller indexes that measure home prices in a set of 10 and 20 cities across the country. Average home prices in those studies fell roughly 30 percent from the second quarter of 2006 through November 2009, according the latest data.

For Las Vegas, however, prices have declined for 39 consecutive months. In November, Las Vegas home prices were 56 percent below their peak and only 4 percent higher than in January 2000, according to the study.

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