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Surrounding by several dozen members of Congress, President George W. Bush signed into law the Economic Stimulus Act of 2008, which will send $300 to $1,200 rebate checks to millions of Americans – and temporarily lift the limits for both conforming loans and loans backed by the Federal Housing Administration (FHA).

Bush described the bipartisan effort as delivering a “package that is robust, temporary, and puts money back into the hands of American workers and businesses."

One of the most visible aspect of the package are tax rebates of up to $600 directed to individuals and $1,200 to couples.

Rebate checks could begin arriving in May. They would be based on 2007 tax returns, which are due April 15.

The stimulus package also temporarily raises the limit on mortgages that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can purchase and market as securities.

"Congress can also help by passing legislation to reform the regulation of Fannie Mae and Freddie Mac, to modernize the Federal Housing Administration, and to allow state housing agencies to issue tax-free bonds to help homeowners refinance their mortgages," said Bush.

"I hope that Congress can act on these matters quickly."

The new limits will climb from $417,000 to as much as $729,750 in costlier markets of the country.

Congress also boosted the cap for FHA loan guarantee programs from $362,790 to as much as $729,750 in high-cost areas.

The measure extends the increased FHA and conforming limits only until the end of 2008 unless Congress extends the time period later.

The proposed law would restrict the two government-sponsored enterprises (GSEs) from purchasing and the Federal Housing Administration from guaranteeing loans above 125% of the median home price for a given area.

For areas where the median home price is $333,600 or less, the conforming loan limit would not demonstrate an increase.

The Secretary of Housing and Urban Development (HUD) would determine the median home price for various housing markets within the next 30 days.

The new law will also prevent the GSEs from buying loans over the $417,000 limit made before July 1, 2007.

However, the provision would still allow borrowers refinance into new loans that could be sold to Fannie Mae and Freddie Mac, since they would be considered new loans.

Fearing an election year recession, Congress made a dogged effort of bipartisanship to swiftly pass some response to the mounting signs of trouble in the U.S. economy.

A week of political jostling in the Senate ended when Democrats in the majority dropped demands for the inclusion of unemployment benefits, heating aid for low-income households and tax breaks for the home building and energy industries.

After a final Senate vote of 81-16 vote, the House ushered the stimulus package to the desk of President Bush with a 380-34 vote only a few hours later.

The new law will add an estimated $168 billion to the deficit over the next two years, in an attempt to stem the damage from the housing slump and credit crunch.

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