The Obama administration on Monday unveiled another bailout program for troubled homeowners, pledging to divert $600 million in housing rescue funds to 5 more states on its list of hardest-hit markets.

The funding is an expansion of its previously announced $1.5 billion fund for state housing agencies in states that have suffered severe home price declines and high unemployment, the U.S. Treasury Department said in a statement.

The second round of funding, which comes from the Troubled Asset Relief Program (TARP), will go to North Carolina, Ohio, Oregon, Rhode Island and South Carolina, the Treasury said.

President Barack Obama announced the creation of the hardest hit fund in February with California, Nevada, Arizona, Florida and Michigan, states where home prices have fallen more than 20 percent from their peak.

The latest announcement comes after Friday's blockbuster announcement that the government would begin providing lenders with incentives to write-off some principal of borrowers who owe more than their home is worth.

No new funds would be used for these programs, but would rather be taken from a $50 billion fund already allocated to Obama's Home Affordable Modification Program, the housing comp1onent of TARP.

(Additional reporting by David Lawder, Editing by Andrew Hay)

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