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.
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 mortgages they cannot afford.