WASHINGTON President Bush signed a housing bill Wednesday intended to rescue about 15 percent of the cash-strapped homeowners in fear of foreclosure in the next year or so.
Early in the morning and out of public view, the president signed it without fanfare in the Oval Office, adding his signature to a measure he once threatened to veto. The White House said he was accompanied by Treasury Secretary Henry Paulson, Housing and Urban Development Secretary Steve Preston and other administration officials.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said the Federal Housing Administration would begin to put in place new policies "intended to keep more deserving American families in their homes."
The legislation is regarded as the most significant housing bill in decades. It won approval from lawmakers eager to come up with an answer to the growing housing crisis in an election year.
The measure includes $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners; $3.9 billion to help communities fix up foreclosed properties; and $15 billion in tax cuts, including an expanded low-income housing tax credit and a credit of up to $7,500, to be repaid, for some first-time home buyers.
The number of homeowners who could lose their homes to foreclosure by the end of 2009 is estimated to be around 2.8 million. Under the legislation, 400,000 having trouble with payments could avoid it by trading their loans for new, more affordable mortgages through the Federal Housing Administration.
Their banks would have to agree to allow the swap and to take a large loss in exchange for avoiding the lengthy and costly foreclosure process. To qualify, homeowners would have to be paying more than 31 percent of their incomes toward their mortgages and show they could afford to make the payments on a new, smaller loan.
The measure also is designed to help stabilize markets, in part by making credit more easily available amid rising defaults and falling home values.
The bill permanently increases to $625,000 the size of home loans in high-cost areas that the government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy and that the FHA can insure. It would otherwise have reverted to $417,000 for Fannie and Freddie and $362,790 for the FHA by the end of the year.
The White House sought to focus attention on parts of the legislation aimed at calming markets. Those include the offer of a temporary but unlimited government line of credit for troubled Fannie Mae and Freddie Mac. The Treasury Department gains power, until the end of 2009, to lend them emergency money or buy their stock.
This is considered crucial because investor fears about the health of the companies, which buy or guarantee about half of the nation's mortgage loans.
An overhaul of the Depression-era FHA also was requested by Bush. So, too, was the provision to keep homeowners from making overly risky mortgage choices by requiring lenders to show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in preforeclosure counseling.
Democratic leaders added an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.
The House passed the bill a week ago. Senators voted on Saturday to send it to the president. The votes were supported by many Republicans, particularly those from areas hit hardest by housing woes.
Through the process, Bush did not like what he saw emerging from Congress and said he would veto it. At first, he opposed the foreclosure rescue through the FHA as an overly cumbersome bailout. Later, though, his veto threat was focused almost entirely on the $3.9 billion in neighborhood grants, which he said would encourage lenders to foreclose rather than work with borrowers.
The president also was sensitive to complaints by fiscal conservatives, who object to the raise in the debt ceiling and the bailout for Fannie Mae and Freddie Mac shareholders. Some, but not all, were mollified by the bill's establishment of a regulator with stronger reins over the two companies and the new "consultative" role overseeing the companies for the Federal Reserve.
Bush withdrew his veto threat early last week, saying hurting homeowners could not wait for the outcome of a veto showdown that would take weeks though he predicted he would have won that fight.
The White House cast Bush's quiet signing of the bill as an act of expedience, not camouflage.
Press secretary Dana Perino said the early morning action was Bush's first opportunity to sign because the bill was transmitted to the White House on Tuesday night. She also noted that most bills are signed without formal ceremonies though that is usually the case because they are minor measures, not legislation of his magnitude.
Bush's action seemed to indicate he wanted to play both sides: avoid being seen as not helping middle America in a crisis and avoid too close an association with a bill that many in the GOP opposed.
"We recognize that there were many people who did not support the bill. We agreed with them on almost every count when it came to that," Perino said.
She said the bill that set for signing ceremony Wednesday one to triple money to fight AIDS and other diseases around the world was the better choice for such attention.
"I would dare say that that deserves a larger signing ceremony than anything else that was passed this week in Congress," she said.