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By Jeremy Pelofsky
WASHINGTON, July 30 (Reuters) - As home foreclosures rise and property values slump, U.S. President George W. Bush on Wednesday signed into law a rescue package that includes emergency backstops for mortgage financing companies Fannie Mae FNM.N and Freddie Mac FRE.N.
Despite opposition to a provision that offers $4 billion in grants to states to buy and repair foreclosed homes, Bush reversed his opposition to the overall legislation because it included numerous other key housing reforms.
The new law boosts oversight of Fannie Mae and Freddie Mac, which own or guarantee almost half the country’s $12 trillion in home mortgage debt. It also expands a temporary line of U.S. Treasury credit and gives the government the option to buy shares in them if they ran into trouble.
“We look forward to put in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac,” said White House spokesman Tony Fratto.
Bush signed the measure in the Oval Office shortly after 7 a.m. EDT (1100 GMT) with his economic team on hand, including Treasury Secretary Henry Paulson who helped negotiate the package with the Democratic-controlled Congress.
The new measures come as prices of U.S. single-family homes plunged at a record pace in May from a year earlier. The closely-watched Standard & Poor’s/Case Shiller composite index of 20 metropolitan areas fell 0.9 percent in May from April, bringing the measure down 15.8 percent from May 2007.
The new law also sets up a $300-billion fund under the Federal Housing Administration to help distressed homeowners get more affordable, government-backed mortgages and get out from under exotic mortgages they cannot afford.
“The Federal Housing Administration will begin to implement new policies intended to keep more deserving American families in their homes,” Fratto said.
The bill also offers tax breaks to spur home-buying; sets up the first national licensing system for mortgage brokers and loan officers; and raises the limit on the size of mortgages that federal agencies can guarantee. (Reporting by Jeremy Pelofsky; Editing by Theodore d’Afflisio)