UPDATE 4-U.S. Senate panel passes housing rescue plan

(Fixes Update number in headline)

* Panel vote sends mortgage rescue bill to full Senate

* Bill could help 500,000 homeowners facing foreclosure

* Fannie Mae, Freddie Mac to cover costs under Senate bill

* Committee chairman hopes Bush can sign bill by July 4

By Patrick Rucker

WASHINGTON, May 20 (Reuters) - The U.S. Senate Banking Committee approved legislation on Tuesday that could save a half million homeowners from foreclosure and help stabilize the nation's rattled housing market.

Under the plan, lenders who agree to erase a large share of the original loan amount could win a government guarantee on future mortgage payments. The bill would also create a stronger regulator for mortgage-finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz).

Both the Senate bill and a similar plan passed by the House of Representatives earlier this month would create a fund under the Federal Housing Administration to allow distressed homeowners to refinance into government-guaranteed loans.