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.

The Treasury Department’s new authority to offer credit and buy stock would expire at the end of 2009. While the legislation does not include a dollar cap on that financial lifeline, it would be subject to the federal debt limit, in contrast with the original administration proposal that would have exempted the lifeline from the debt limit.

Paulson argued that a larger lifeline would do more to calm markets, in turn reducing the chance that the backstop would ever have to be used.

The legislation includes an $800 billion increase in the debt limit for all government obligations, pushing the ceiling to $10.6 trillion, as previously planned under the fiscal 2009 budget resolution (S Con Res 70).

The bill also includes provisions aimed at helping struggling homeowners. It would overhaul the Federal Housing Administration, in an effort to make the agency’s insurance products more competitive in the real estate market. The FHA would be allowed to insure up to $300 billion worth of new, refinanced loans for borrowers struggling to make their current mortgage payments.

Under the voluntary refinancing program, both the lender and borrower would have to agree to the terms of the new loan. Lenders would have to take substantial writedowns on the original loan’s value, and the new loan would have to be affordable for the borrower.

The measure also establishes an affordable housing trust fund to be financed by Fannie and Freddie, a priority for one of the bill’s architects, House Financial Services Chairman Barney Frank, D-Mass.

Frank praised Dodd and Shelby for clearing the bill, but said more work was ahead. “We are now all going to work together with the administration to see that this is implemented as rapidly as possible,” Frank said in a statement. “And I want to urge the [loan] servicers now that this is about to become law to show some forbearance for troubled borrowers who may qualify for the program.”

Lawmakers also included a $15.1 billion package of housing-focused tax breaks. The measure would offer a one-time tax credit to most first-time homebuyers that is equivalent to an interest-free loan for 10 percent of the home’s cost, up to $7,500 (down from $8,000 in the Senate version.) The credit would be available until July 1, 2009.

The package also would allow taxpayers who do not itemize on their returns to claim a one-time $500 deduction ($1,000 for married couples filing jointly) for local property taxes.

The cost of those incentives, and of other provisions, would be offset by other tax provisions in the package, the largest of which would require reporting of credit card transactions.