By AP Real Estate Writer
updated 6/23/2010 9:43:34 AM ET 2010-06-23T13:43:34

The Obama administration has approved five state-designed plans to help homeowners as part of a $1.5 billion effort to assist areas slammed by the housing bust.

Treasury Department officials, who spoke on condition of anonymity because the decisions had not yet been made public, said plans for Arizona, California, Florida, Michigan and Nevada had received approval.

The states estimate that the plans are projected to help up to 93,000 homeowners. That's a small part of the administration's main existing $75 billion mortgage assistance program, which is widely viewed as a disappointment.

President Barack Obama unveiled the state assistance effort in February. Since then, state agencies have designed their own approaches, largely focused on borrowers who owe more on their properties than their homes are worth or those who have lost their jobs.

Officials say the state efforts could be used to make changes to the administration's broader mortgage assistance plan. The state agencies are planning to work with local housing groups to put the plans in place.

The states were picked because they experienced at least a 20 percent decline in home prices. The programs, which vary by state, will help borrowers who have lost jobs make mortgage payments, cancel second mortgages that have blocked loan modifications and assist with the payment of piled-up mortgage bills.

According to the proposals from state housing finance agencies, the largest recipient of the funding is California, which will get nearly $700 million to assist about 46,000 borrowers.

Florida is getting the second-largest pot of money, $418 million. That will help about 12,500 borrowers.

Michigan will receive about $155 million to assist 17,000 borrowers, while Arizona will receive $125 million for 12,000 borrowers. Nevada will receive $103 million for about 5,000 homeowners.

Besides these states, the Obama administration is providing an additional $600 million in financial support to help homeowners in states with high rates of unemployment.

Those states — Ohio, North Carolina, South Carolina, Oregon and Rhode Island — have submitted plans to the Treasury Department. They are being reviewed now, with approvals expected in August.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis, which have met with limited success.

More than a third of the 1.2 million borrowers who have enrolled in the Obama administration's main mortgage modification program have dropped out, officials said this week. About 340,000 homeowners, or 27 percent of those who started the program, have received permanent loan modifications and are making payments on time.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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