President George Bush today signed the Foreclosure Prevention Act into law — a bill that he threatened to veto several times since it was introduced earlier this year.

The bill is perhaps the most significant housing legislation to pass in decades, helping resuscitate a struggling nationwide housing economy and keeping homeowners who are facing foreclosure in their homes.

Of course, the main thrust of the initiative is to keep people in their homes. And to do that the program allows for homeowners who are “upside down” on their mortgages (owe more to the bank than the homes are worth) to obtain more affordable mortgages backed by the Federal Housing Administration (FHA).

Distressed homeowners will be required to first show that they can afford new reamortized loans before reworking their existing mortgages. In addition, lenders would have to agree to the new terms, which could translate into losses.

However, lenders would likely rather help homeowners stay in their homes rather than enduring more costly and drawn-out foreclosure situations.

Of course, the bill also includes a tax credit of up to $7,500 for first-time homebuyers who purchase houses between April 9, 2008, and July 1, 2009.

For more on the vast benefits of the Foreclosure Prevention Act click here. To get started searching for a home — and taking advantage of the tax credit — click here!