Lenders in five states in the US have been offered the opportunity to apply for relief on troubled mortgages from a fund of $1.5bn set up by the US Government.

The goal of the fund is to enable struggling homeowners via lenders, to have part of their debt removed in states where home prices have fallen more than -20% from their peak. The five states are Michigan, Nevada, California, Arizona and Florida.

US President Barack Obama, said: "Government cant solve this problem alone. It cant stop every foreclosure, and tax dollars shouldnt be used to reward the very irresponsible lenders and borrowers who helped bring about the housing crisis. But what we can do is help families whove done everything right stay in their homes whenever possible."

The Treasury department has released guidelines to lenders on how to apply for funding to modify mortgages, reduce the size of principal and help the unemployed to prevent foreclosures. The deadline to submit proposals is 16 th April 2010 and the Treasury will review each proposal and begin distributing the money within six weeks.

The five states were chosen because of dire housing and unemployment problems with home prices having fallen -50% in Nevada, -39% in California, -37% in Florida and Arizona, and -24% in Michigan. At the end of 2009, delinquent home loans totalled 62,622 in Nevada, 494,640 in California, 309,022 in Florida, 105,853 in Arizona and 120,030 in Michigan.