Obama to announce $1.5 bln for state housing help

LAS VEGAS Feb 19 (Reuters) - 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.

An 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.

The administration official acknowledged that $1.5 billion was a small number compared to the scope of the problem.

The funding 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. (Reporting by Jeff Mason, editing by Anthony Boadle)