The move comes despite the president's earlier objection to a $3.9 billion provision in the bill that would provide grants for states and communities to buy foreclosed homes in distressed neighborhoods.
"We believe this is not the time for a prolonged veto fight," White House spokeswoman Dana Perino told reporters in a conference call, according to the Associated Press. "The positive aspects of the bill are needed now to increase confidence and stability in the housing and financial markets."
The bill, which congressional analysts estimated could cost up to $25 billion, will also allow the federal government to shore up housing lenders Fannie Mae and Freddie Mac, and will help homeowners get new, more-affordable loans.
It gives the Treasury Department the authority to buy Fannie Mae and Freddie Mac stock, if necessary, and to extend the companies unlimited lines of credit. Together the two congressionally chartered companies back or own almost half of U.S. mortgages.
The bill would also allow strapped homeowners with high-interest adjustable mortgages to refinance into fixed-rate mortgages backed by the Federal Housing Administration.
It would create a new regulator with new controls over Fannie Mae and Freddie Mac, including the power to approve executives' pay packages.
Finally, it would extend about $15 billion in housing tax breaks to homeowners, particularly first-time homeowners and recent homebuyers.
The bill is expected to pass in both the House and Senate. It was worked out among leaders from both parties, and includes several compromises. For example, it would allow Fannie Mae and Freddie Mac to buy loans, and the FHA to insure loans, up to $625,000 -- a lower number than many Democrats wanted but higher than some Senate lawmakers originally envisioned, according to the Wall Street Journal.
"Nobody in America will agree with everything that is in this bill, but I think enough people in America will find it acceptable, so it will go to the president's desk to be signed," House Financial Services Committee Chairman Barney Frank (D., Mass.) said, according to the Wall Street Journal.
Lawmakers stressed that the $25 billion cost estimate is uncertain, and that the bill could end up costing much less: "Everyone knows it's just a wild guess," said Sen. Jim DeMint, R-S.C., the Journal reported.