Obama, Democrats have mortgage relief timetable: sources

WASHINGTON (Reuters) - The Obama administration and Democratic leaders in Washington have agreed to try and pass a bankruptcy reform initiative as part of a major spending bill they have planned for early this year, sources familiar with the plan said on Friday.

In a meeting on Friday between President Barack Obama, Congressional Democrats and party leaders agreed that they would soon push the reform that would let bankruptcy judges erase some mortgage debt for troubled borrowers, the sources said.

Lawmakers had earlier agreed not to include the controversial provision in an economic stimulus bill making its way through Congress.

Democratic leaders on Capitol Hill, hoping to pass the stimulus bill with broad support, do not want to weigh it down with provisions that could lose votes.

The initiative is designed to help turn back a wave of foreclosures by giving bankruptcy judges broad authority to rewrite the terms of home loans.

Last year, the lending industry vociferously opposed the plan, but that opposition has wilted as the housing crisis has worsened.

Earlier this month, Citigroup Inc agreed to principles under the program, known as mortgage "cramdown."

(Reporting by Patrick Rucker; editing by Gary Crosse)