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Bush signs massive housing bill

world Updated: Jul 30, 2008 19:04 IST

US President George W Bush has signed an elaborate housing rescue plan designed to help thousands of homeowners avert foreclosure and bolster mortgage finance giants, the White House said on Wednesday.

Bush signed the most sweeping housing legislation in decades "to improve confidence and stability in markets, and to provide better oversight for (struggling US mortgage lenders) Fannie Mae and Freddie Mac," White House spokesman Tony Fratto said in a statement announcing the signing.

"The Federal Housing Administration will begin to implement new policies intended to keep more deserving American families in their homes," Fratto added.

The Housing and Economic Recovery Act of 2008, which legislators from both sides of the aisle have described as vital to stem fallout from a slumping housing sector, provides 300 billion dollars in federal guarantees to help refinance troubled mortgages.

It provides for government credit and equity injections in Fannie Mae and Freddie Mac, the two mortgage lenders that underpin much of the housing market, and calls for some 3.9 billion dollars to help local governments buy and rehabilitate foreclosed homes.

Opponents to the bill had argued that it would reward "irresponsible" lenders and consumers and allow the government too big a role in the housing market.

Bush, too, had opposed the bill because of the inclusion of the local government grants, but eventually dropped his opposition.

The bill's supporters stressed that providing a financial lifeline for the government-sponsored Fannie Mae and Freddie Mac as well as more regulatory oversight would contribute to confidence and stability in housing and financial markets.

The aid package comes with the housing sector still weakening from a nearly two-year-old slide and data showing home prices falling further, inventories rising and many buyers waiting on the sidelines.