Movement may be seen on mortgage aid plan: Rep. Frank

By Svea Herbst-Bayliss and David Lawder

BOSTON/WASHINGTON (Reuters) - An influential Democratic congressman said on Wednesday the Bush administration was willing to discuss a bold plan he proposed to tackle the nation's worsening mortgage foreclosure crisis.

But minutes after U.S. Rep. Barney Frank said the White House indicated a willingness to discuss the possibility of federal backing for hundreds of thousands of home loans, the U.S. Treasury Department denied any deal was in the works.

The back-and-forth between Frank, who chairs the powerful House of Representatives Financial Services Committee, and the White House underlines the political obstacles facing the ambitious plan to guarantee more federal aid in the form of insurance for up to $300 billion in refinanced, affordable-cost mortgages.

"We are now getting some indications that they are ready to talk about it," Frank told Reuters before addressing a town hall meeting in Boston on harmful banking practices.

"Treasury said, 'let's talk'," he said.

Frank said the Treasury officials made the overtures late last week or early this week as a crisis on Wall Street threatened to unhinge the U.S. financial system.

Frank's plan to expand Federal Housing Administration guarantees to ease the strain on Americans at risk of losing their homes has faced stiff political resistance since it was unveiled on March 13. His comment on Wednesday suggested a possible end to the deadlock.

But Treasury spokeswoman Michele Davis fired back that the administration is unwilling to haggle over Frank's plan.