[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2010/images/02/19/art.boreid0219.gi.jpg caption=" President Obama's campaign-style event also served as a rally for Senate Majority Leader Harry Reid who is facing an extremely tough re-election battle this year."]
Henderson, Nevada (CNN) - President Barack Obama took his economic recovery agenda on the road Friday, unveiling a new housing assistance program at a boisterous town hall forum.
The campaign-style event also served as a rally for Senate Majority Leader Harry Reid, D-Nevada, who is facing an extremely tough re-election battle this year.
Reid "is a fighter," Obama declared in a packed high school gym. He "has never stopped fighting ... for middle class families."
The president "has a superb mind," Reid said, returning the favor. "I say no president, not even the great Franklin Roosevelt, had the problems this man has."
Obama, who carried historically Republican-leaning Nevada in 2008, also was scheduled to appear with Reid later Friday at an event with the Las Vegas Chamber of Commerce.
Obama used his trip to Nevada, which has been hit hard by home foreclosures, to lay out a $1.5 billion program to help borrowers in the five states most affected by the housing crisis.
The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.
Also, the agencies would be able to assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.
The initiative will be funded with money from the TARP bank bailout.
The money 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.
Obama's 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 percent of pre-tax income, has placed more than a million people in trial modifications. But it has given lasting help to only 116,000 homeowners, mainly by lowering their interest rates.
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 provides 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 people with "underwater" mortgages.
Friday's announcement shifts the burden of coming up with solutions to the housing agencies - organizations that are state-chartered but mostly operate independently.
Traditionally, these groups focus on affordable housing, providing assistance to first-time homebuyers and those with low incomes. Nationwide, they have provided mortgages to more than 2.6 million first-time purchasers and have financed 2.9 million low- and moderate-income apartments, according to the National Council of State Housing Agencies.
The majority of underwater mortgages are heavily concentrated in five states being targeted by Obama's proposal: Nevada, where 65 percent of mortgages meet the definition; Arizona, at 48 percent; Florida, at 45 percent; Michigan, at 37 percent; and California, at 35 percent, according to the research firm First American CoreLogic.
These states also have among the highest unemployment levels as well, with Michigan at 14.6 percent, Nevada at 13 percent, California at 12.4 percent, Florida at 11.8 percent.
Arizona has a jobless rate of 9.1 percent, which is better than the national 9.7 percent rate for January, according to the Bureau of Labor Statistics.
–CNN's Tami Luhby contributed to this report