President Bush has signed into law a bill that will help homeowners facing foreclosure and shore up Fannie Mae and Freddie Mac.

The White House had initially opposed provisions in the bill that offer $3.9 billion in grants to states and localities to purchase and renovate foreclosed properties. But the president backed off on his veto threat after Treasury Secretary Henry Paulson came out in strong support of the overall bill.

The bill creates a new regulatory agency to oversee Fannie Mae and Freddie Mac known as the Federal Housing Finance Agency, replacing the Office of Federal Housing Enterprise Oversight. The already-existing Federal Housing Administration will be able to insure higher loan limits of $625,500, and a new FHA program will insure up to $300 billion in refinanced 30-year fixed-interest loans for approximately 400,000 homeowners.

The legislation also includes several tax measures. A new, temporary tax credit is available for first-time homebuyers. The credit is the lesser of 10 percent of the home's purchase price or $7,500. The credit serves as an interest-free loan, which is paid back by the homeowner over the subsequent 16 years, or when the home is later sold.

The bill also provides $11 billion in tax-exempt mortgage revenue bonds that can be used to finance rental housing, offer loans to first-time homebuyers or refinance subprime loans. A temporary increase in the amount of low-income housing tax credits has been allocated to the states for 2008 and 2009. In addition, a new standard deduction for 2008 for property owners who do not itemize their income tax deductions will be available, allowing up to $1,000 for joint income tax filers, or $500 for single filers, to be claimed.

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