Senate poised to approve housing rescue bill

WASHINGTON (Reuters) - The Senate could vote as early as Tuesday on a housing rescue plan that would deliver billions of dollars in aid to borrowers facing foreclosure.

At its heart, the legislation would create a $300 billion mortgage rescue fund that would see the government backstop 400,000 failing loans.

The program would be bankrolled by a new tariff on Fannie Mae and Freddie Mac -- two mortgage finance companies that hold government charters and would answer to a new regulator under the sweeping legislation.

Other provisions of the bill would send $4 billion in aid to communities hard-hit by foreclosures, reform mortgage disclosure and give $180 million to loan counseling centers.

The non-partisan Congressional Budget Office guesses the mortgage insurance fund would reach 400,000 home loans in the next three years or 18 percent of shaky mortgages headed towards foreclosure during that time.

Although the White House has threatened to veto the legislation, the bill has strong support from Republican and Democratic leadership and so is expected to pass the senate.

Lawmakers have scheduled a procedural vote Tuesday that would limit debate on the measure and push it toward a final vote.

Whatever legislation passes the senate would have to be ratified by the U.S. House of Representatives and lawmakers in both houses have said they want to send the legislation to President George W. Bush by the first week of July.

Late last week, Rep. Barney Frank of the U.S. House Financial Services Committee said mid-July was a more likely timetable.

"My hope is that, when the senate finishes, we can reach some sort of conceptual agreement on most of the issues by the end of next week," the Massachusetts Democrat told reporters. "I think by the middle of July we ought to be able to pass the bill."

The mortgage insurance fund would be operated by the Federal Housing Administration, which is the largest federal program to aid new homeowners.

On Monday, the FHA chief said he expects lawmakers will feel compelled to ratify the housing rescue plan, but he set an even later timetable than Frank.

"In an election year, I think both parties want to get some legislation done, so I'm optimistic that before the August recess we'll have something done," he said in New York.

(Reporting by Patrick Rucker and Lynn Adler in New York; Editing by Andre Grenon)