Senate clears way for housing rescue vote

WASHINGTON (Reuters) - The U.S. Senate moved closer on Monday to passing election-year legislation aimed at saving hundreds of thousands of troubled American homeowners from foreclosure.

The Senate agreed to limit debate and head toward concurring with House-approved amendments to the sweeping measure.

A Senate vote on those amendments is likely to be held on Wednesday, clearing the way for the legislation to be reconciled with a similar measure that has already passed the U.S. House of Representatives.

The White House has threatened to veto the measure, but has said it is open to working with lawmakers on a possible compromise.

At the heart of the legislation is a plan to create a government-backed mortgage insurance fund and a new regulator for mortgage-finance companies Fannie Mae and Freddie Mac.

Democrats who conceived the rescue legislation have said President George W. Bush would be foolish to reject the housing aid program as home values sink and the rate of failing loans continues to rise.

(Reporting by Patrick Rucker; Editing by Dan Grebler)