The commitment provides a particularly large boost to Los Angeles, where the city's once-promising efforts to build a similar $100-million fund of its own have stalled in the wake of a slowing economy. Compounding problems, LA's hopes that federal subsidies would account for a large share of the city-run fund have been dashed now that the US Treasury's own reserves are dwindling and billions of federal dollars are being re-directed to help New York and other areas recover from the Sept. 11 terrorist attacks.

Fannie Mae does not make loans directly to buyers or builders, but instead purchases the loans from lenders. Its $50-billion commitment will include a program to provide low-cost equity and debt financing for developers of apartments and affordable single-family homes, says Ted Chandler, vice president of housing and community development for Fannie Mae's regional office in Pasadena.

The program also includes loans for potential home-buyers who have had past credit problems and special mortgage financing for teachers, police and firefighters. A bilingual campaign geared toward immigrants will also be launched.