President Bush dropped his opposition to new legislation designed to shore up the housing market, White House press secretary Dana Perino told reporters . Treasury Secretary Henry Paulson says the bill, which is moving swiftly through Congress, should help turn around the housing downturn. The president could sign the bill into law by the end of the week, despite his previous objections to its provision of $3.9 billion to help neighborhoods hit hardest by foreclosures. The White House also had criticized the plan as a burden on government agencies and a risk for taxpayers.
Under the new legislation, the Treasury Department will have the power to extend an unlimited line of credit to government-sponsored mortgage companies and buy an unspecified amount of their stock. Also, struggling homeowners will be allowed to refinance into more affordable loans backed by the Federal Housing Administration in an effort to stem the tide of foreclosures. The bill places tighter controls on Fannie Mae and Freddie Mac, and sets a cap of $625,000 on the loans that they may buy. It includes about $15 billion in housing tax breaks and allows people who don’t itemize their taxes to claim a $500 – $1,000 deduction on their 2008 property taxes. The bill also increases the limit on the national debt to $10.6 trillion.
“We believe this is not the time for a prolonged veto fight,” Perino says. “The positive aspects of the bill are needed now to increase confidence and stability in the housing and financial markets. While we have concerns with other aspects of the bill, it is important that the new authorities are put in place promptly.”