The housing rescue package cleared two major hurdles today with passage by the House of Representatives and the announcement that President George W. Bush would not veto the bill, despite the White House’s reservations about money for localities to buy distressed properties in their communities.

“We believe we would win a prolonged veto fight on this bill, because we think there's enough support, especially with House Republicans, to have rejected this $4 billion in bailout for lenders,” White House Press Secretary Dana Perino said this morning in a press briefing with reporters. “However, given that we want and need for the Treasury Secretary to have these new authorities that he's asking for, we don't think that waiting until mid-September, at best, would be prudent.”

The bill, which has been back and forth between the House of Representatives and the Senate since summer 2007, contains a number of provisions designed to provide relief to homeowners facing foreclosure, stronger regulation of mortgage finance firms Fannie Mae and Freddie Mac, help communities with vacant properties, and support the housing market through tax credits for first-time home buyers and higher limits on Federal Housing Administration loans.

It passed the House this afternoon with a vote of 272 to 152.

The cornerstone of the package is a new $300 billion program that would allow financially pressed homeowners to refinance their abusive or unaffordable mortgages into FHA-insured loans with the agreement of their lender, who would have to write down the value of the loan for the refinancing to occur. The program is not mandatory, but the thinking is that lenders would rather take a lowered value for the loan than foreclose on the home or sell it as a distressed property.

“We think this is important for the overall health of the market,” Perino told the press. “It's not just to help homeowners but to help low-income homeowners, in particular, when it comes to those housing GSEs. But we also think it will have a positive impact on the overall economy, and that's why the President has decided to sign the bill.”

The bill now moves to the Senate for final approval, which is expected this week.