WASHINGTON -- Rhode Island Sen. Jack Reed's long-sought housing initiative for poor people has become law.

A fund for the construction and repair of rental housing for the poor is at the heart of the housing rescue bill that President Bush signed into law without fanfare this morning.

The huge bill aims to sure up the secondary mortgage market giants, Freddie Mac and Fannie Mae, and to stem the tide of mortgage foreclosures that is running into the hundreds of thousands nationwide.

A key to enactment of the bill with bipartisan support was a financing mechanism, largely Reed's handiwork, that does not rely on direct taxation.

Instead, a fund to pay for the refinancing of delinquent mortgages will be built on fees imposed on transactions with Fannie Mae and Freddie Mac.

In the first part of its life, the lion's share of the fund will cover the mortgage rescue program, with a fraction going to the program for low income families.

But eventually the permanent fund will be wholly devoted to the housing initiative for poor people -- a goal that a number of congressional Democrats, including Reed, pursued for years.

-- By John E. Mulligan, Journal Washington bureau