Democrats' aid plans still in question

But even as Democratic lawmakers pledged to move swiftly on a plan to have the government guarantee US$400 billion (euro253 billion) in troubled mortgages, industry experts said that help might come too late for many strapped borrowers.

Some mortgage industry experts say steps already taken by the government, such as cutting interest rates and giving government-sponsored mortgage companies Fannie Mae and Freddie Mac broader roles, may obviate the need for the mortgage-guarantee legislation.

"By the time it gets here, will it be necessary?" asked Keith Gumbinger, a senior vice president with financial publisher HSH Associates.

Others say the mortgage market is in such dire shape that any help is welcome. "The more resources you can put at this... the more likely you're going to be able to get the market back in equilibrium," said Brian Bethune, an economist with Global Insight.

Sen. Christopher Dodd and Rep. Barney Frank, both Democrats, want the Federal Housing Administration, the Depression-era agency that insures mortgages, to guarantee US$300 billion to US$400 billion (euro190 billion to euro253 billion) in refinanced loans to troubled borrowers.

It is just one of a flurry of housing proposals kicking around Congress, but it has garnered the most attention lately because of its scope. Other ideas pushed by Democrats include letting bankruptcy judges rewrite the terms of distressed mortgages and providing federal grants to help communities with large numbers of foreclosed properties.

Dodd, the chairman of the Senate Banking Committee, minimized the significance of the Paulson plan to ordinary Americans, saying the proposal to overhaul how banks and investment firms are regulated "has nothing to do with the current problems we're facing." He added: "We've got a contagion. We're in a recession...We've got people losing their homes, and this problem (is) spreading to other sectors of the economy."

While some Republicans -- particularly in hard-hit states such as Michigan, Ohio, Florida and California -- are likely to latch on to housing rescue plans, Senate Republicans are likely to be more skeptical, said Brian Gardner, Washington analyst with Keefe, Bruyette & Woods Inc.

Gardner said the Dodd-Frank plan could be seen as interfering with market forces, especially as indications emerge that the housing market is improving, such as February's unexpected 2.9 percent increase in existing home sales.

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