Also, the agencies can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.( See also Homeowners Emergency Mortgage Assistance Program)

Obama is scheduled to unveil the initiative, which will be funded with money from the TARP bank bailout, at events in Nevada, which has the highest number of underwater homeowners at 65% and the nation’s second-highest unemployment rate at 13%.

The president will be joined by Senate Majority Leader Harry Reid, D-Nev., who is facing a tough relection campaign.

The funds will be allocated based on a formula that takes into account home price declines and unemployment. The agencies’ programs must be approved by the Treasury Department.

The move is the administration’s latest attempt to fix its signature foreclosure prevention effort, the Home Affordable Modification Program, which has been widely panned for not doing enough.

The year-old initiative, which lowers qualified borrowers’ monthly payments to no more than 31% of pre-tax income, has placed more than one million people in trial modifications. But it has given lasting help to only 116,000 homeowners, mainly by lowering their interest rates.

Denied! No long-term mortgage help

Consumer advocates and housing experts for months have called on Obama to expand the program to help the jobless and those suffering steep declines in their home value, two sectors that have received relatively little assistance from the modification effort. Administration officials repeated as recently as Wednesday that they were working on the problem, but that it was a complex issue.

Also, many homeowners with second liens have had difficulty getting into the loan modification program. In April the administration had announced a program that provided incentives for these lenders to work with borrowers, but only Bank of America has signed up so far and it did so only last month.

A senior Obama official cautioned that the new program is just another tool in the White House arsenal, not a full solution to the housing woes facing the unemployed and underwater.

“As important as $1.5 billion will be to these five states, it’s not going to solve what is a catastrophically large problem,” said the official, speaking to reporters on a conference call. “It’s going to help as many of the other programs do.”