By Benton Ives, CQ Staff

The Senate sent to President Bush’s desk a landmark housing bill intended to stabilize financial markets and the battered housing sector.

The Senate voted 72-13 on Saturday morning to accept a House-passed version of the bill (HR 3221), thus ending months of back and forth between the chambers and the two parties. The compromise package includes provisions to help borrowers get out from under loans they cannot afford and throws a lifeline to the struggling mortgage giants Fannie Mae and Freddie Mac.

The White House has indicated the president will sign the bill into law.

The package marks the most robust congressional response, so far, to ongoing problems in the housing market, where foreclosures continue to rise and rattle Wall Street.

“It will make a difference not only in the housing market, but the entire economy,” said Senate Majority Harry Reid , D-Nev. He said the bill will probably reach the White House on July 28.

Bush is expected to sign the bill quickly, in part because it includes two White House priorities: A backstop for Fannie and Freddie and creation of a strong new federal regulator for the two companies that will be empowered to set capital levels and limits on their mortgage portfolios.

Senate Banking Chairman Christopher J. Dodd , D-Conn., who along with the panel’s top-ranking Republican, Richard C. Shelby of Alabama, shepherded the bill through the Senate, called the bill must-pass legislation. “I can’t promise we’ve designed a silver bullet,” Dodd said, but “inaction was unacceptable.”

“We’ve fundamentally altered the way we do business when it comes to housing,” Dodd said, adding that he hoped the measure would provide some good news for the beleaguered real estate markets.

Despite some reservations about the Fannie and Freddie backstop Shelby said the need to protect overall market stability trumped those concerns. “This is not the bill I would have written had I had the opportunity to do so,” Shelby said during Saturday’s debate. “It is a bill, however, that contains very important provisions that need to become law in the interest of the integrity of our financial system.”

Some conservative Republicans, particularly in the House, continue to complain that taxpayers could end up covering some portion of Fannie and Freddie’s combined $5.2 trillion in insured mortgages and other debt obligations.

The White House opposed earlier versions of the bill, largely because of $3.9 billion in grants to states for rehabilitating foreclosed properties. The administration said that would amount to a bailout for lenders. But the administration reversed its earlier opposition when Fannie and Freddie became imperiled.

Ongoing turmoil in the real estate markets raised concern about the mortgage giants’ financial health. Investor confidence in Fannie and Freddie plummeted, and the resulting plunge in their share prices generated concerns about their ability to raise new cash to meet their debt obligations.

Fearing that wider problems could spread to international financial markets if Fannie or Freddie failed, Treasury Secretary Henry M. Paulson Jr. asked Congress for authority to extend new credit lines and buy stock in the companies if they ran into serious financial trouble.