UPDATE 1-Vote ahead on tax break-laden Senate housing bill

(Recasts with Dodd comments, background)

By Kevin Drawbaugh

WASHINGTON, April 4 (Reuters) - The U.S. Senate was expected to approve legislation next week that would only modestly address the U.S. mortgage market crisis while delivering some major tax breaks to corporations.

Senate Banking Committee Chairman Christopher Dodd said on Friday he was disappointed that the bipartisan bill did not go further to help struggling homeowners facing foreclosure.

"It does not really include fundamental relief," said the Connecticut Democrat on the Senate floor as lawmakers adjourned for the weekend. "You may be disappointed, as I am."

Dodd called the bill a step in the right direction, adding, "Anyone who thinks this bill is the end is making a mistake."

Dodd said he plans to have committee hearings next week on a more ambitious proposal, similar to a House plan offered by Rep. Barney Frank that would greatly expand the Federal Housing Administration's (FHA) role in tackling mortgage problems.

Frank, a Massachusetts Democrat, also plans to have hearings next week on his proposal to let the FHA offer hundreds of billions of dollars in new guarantees to help refinance distressed mortgages written down by banks and loan holders.

A comparatively moderate FHA reform was included in the Senate bill debated this week and headed for likely passage on Tuesday or Wednesday, along with a grab-bag of tax measures.