Majority Leader Harry Reid, D-Nev., said procedural hurdles the Senate is being forced to overcome by some Republicans and the consideration of an electronic surveillance bill and supplemental spending legislation would make it hard to finish the housing bill by Friday.

He did vow, however, that the Senate would take the procedural steps necessary to pass a housing bill that is likely to receive the support of a large majority of lawmakers.

"We will complete it," Reid said, though he acknowledged that may not occur until after lawmakers return from their break.

The Senate had originally hoped to take a final vote Wednesday on the package of tax credits for homeowners, changes to the Federal Housing Administration, and a $300 billion program to refinance borrowers.

The legislation stalled, however, after Sen. John Ensign, R-Nev., sought to amend the bill to include around $6 billion in renewable-energy tax credits to the legislation. Senate Democrats oppose that effort because of the cost of the tax credits, which would not be offset. That would complicate legislative efforts when the housing bill reaches the House, where Democrats are committed to pay-as-you-go budget rules that would require an offset to the energy tax credits.

"Why would we want to send something to the House just to have them send it back?" Reid asked during a speech on the Senate floor.

Ensign, however, said he wouldn't back down in his effort to attach the tax credits to the housing bill.

"We have to swallow things sometimes from the House, sometimes they have to swallow things. This is one of those things that could be a nice compromise," Ensign told reporters at a hastily scheduled press conference.

Senate rules require that lawmakers deal with the housing bill in three parts. Senators took care of one of those three steps Wednesday, voting 79-16 in favor of a package of Senate-supported amendments. The second two steps will be more difficult, likely requiring supporters to twice seek to limit debate - a procedure that will each time take 60 votes.

Limiting debate would allow lawmakers to prevent Ensign from offering his renewable energy tax amendment to the bill.

"I call this gallstone legislation: it will pass but it's painful in the process," Senate Banking Chairman Christopher Dodd, D-Conn., joked with reporters at an afternoon press conference.

The package combines a number of different housing-related measures, including $150 million in funding for housing counseling, $10 billion in additional mortgage revenue bonds, and a regulatory overhaul of Fannie Mae (NYSE:FNM) (FNM), Freddie Mac (NYSE:FRE) (FRE), and the 12 Federal Home Loan Banks.

The centerpiece of the legislation is a program offering up to $300 billion of FHA-insured mortgages to help refinance struggling borrowers into affordable loans. The program would rely on lenders voluntarily writing down the value of a distressed loan for the homeowner to qualify for the new FHA-backed loan, and in return borrowers would have to share future price appreciation with the federal government.

House and Senate lawmakers will need to reconcile competing versions of the legislation once the Senate takes a final vote on the measure. While the two chambers are close on most aspects of the bill, differences still remain on the size of loans Fannie and Freddie can purchase - the House favors a higher limit than the Senate - and other provisions, including Senate language cutting off down payment assistance programs.

-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com

    (END) Dow Jones Newswires   06-25-08 1948   Copyright (c) 2008 Dow Jones & Company, Inc.