It was a tricky congressional task: restoring confidence in mortgage giants Fannie Mae and Freddie Mac, helping homeowners struggling with loan payments, giving a boost to cities facing a rash of foreclosures — all while not leaving taxpayers feeling like they were bailing out foolish decisions made by homebuyers and lenders.

Democratic Congress-man Tim Walz and Republican Sen. Norm Coleman think congressional negotiators, after months of effort, pulled it off with the bill that passed the House Wednesday and is expected to clear the Senate Saturday. President Bush also has been persuaded, dropping threats to veto the bill.

“They got it right, I think,” said Walz, DFL-Mankato. “It’s a tough one. ... My first take is, I wish we didn’t have to do this.”

But the risks to the economy of a further deterioration in the condition of Fannie Mae and Freddie Mac made it imperative the federal government act, Walz said.

“The fact of the matter is this is an unprecedented situation, and we have to stabilize the housing market,” he said.

Although fewer than one in four House Republicans backed the bill, Coleman said he will support it in a procedural vote today and a final vote he expected Saturday.

“This is a crisis. We have to deal with this issue,” Coleman said. “Between the housing crisis and the energy crisis, those are the two things that are dragging this economy down.”

The bill gives the treasury secretary financing authority to provide potentially hundreds of billions of dollars of taxpayer money to the government-sponsored mortgage companies. Federal officials say the companies are financially solid and don’t expect to use the new authority, but the hope is the “back-stop” provision will boost confidence in the financial markets.

The legislation also will help about 400,000 Americans who are unable to keep up with mortgage payments, allowing them to refinance into more affordable mortgages. Lenders, who would be required to take a loss on the original mortgage, would have to agree to the change, presumably to avoid the costs of a foreclosure.

Estimates are that the 400,000 would represent less than a third of the total number of Americans facing foreclosure.

While some House Republicans said the bill puts responsible taxpayers on the hook for reckless decisions by homebuyers and lenders, Coleman said the final legislation avoids doing that.

“We’re doing stuff to protect the economy, but this bill doesn’t do anything to bail out speculators and investors,” he said.

The provision that prompted the earlier veto threats by Bush — nearly $4 billion in housing redevelopment grants for cities with neighborhoods swamped by foreclosures — was supported by both Coleman and Walz. Those neighborhoods would otherwise see property values plunge, which could lead to rising crime rates and more government expense, Walz said.

A pair of provisions are aimed at helping would-be homeowners and mostly lower-income homeowners as well. The first provides a tax credit of up to $7,500 for first-time buyers for a limited time. The second allows people who don’t itemize their tax deductions a onetime property-tax deduction of $500 for individuals or $1,000 for families.

Walz thinks the latter provision could be helpful for some families in the 1st District.

“In this economy, I think we’ve got a lot of good hard-working Minnesotans who are making their loan payments, but by the skin of their teeth,” he said.

Coleman also was able to keep a provision he sponsored in the bill. It provides an extended grace period from foreclosure for soldiers returning from overseas deployments.

Coleman said he understands some conservatives don’t like the idea of the government stepping into the marketplace, but he supports provisions in the bill to more tightly regulate the mortgage companies. And he said larger economic considerations required the legislation be passed to shore up companies that hold trillions of dollars of American mortgages.

“If they were to go down, it would have a devastating effect on housing across the board and on our economy beyond what has already been suffered,” he said.