http://ap.google.com/article/ALeqM5hTPEQZyeqPg80iIH0uvvPz6Lz3mgD8VP84RO0

By ANDREW TAYLOR – 4 hours ago

WASHINGTON (AP) — Senate leaders have reached a deal on advancing legislation to ease the nation’s home foreclosure crisis.

The bill has not been written yet, but Republican Leader Mitch McConnell of Kentucky and Democratic Leader Harry Reid of Nevada defused a GOP filibuster threat that stymied a Democratic plan a month ago.

The chairman of the Senate Banking Committee, Connecticut Democrat Chirstopher Dodd, and the panel’s top Republican, Richard Shelby of Alabama, were told to forge a compromise by midday Wednesday.

The legislation would would provide billions of dollars to buy up foreclosed homes.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

WASHINGTON (AP) — A legislative effort to address the nation’s home foreclosure crisis was likely to move ahead in the Senate Tuesday as Democratic and GOP leaders seemed poised to defuse a potential filibuster.

The bill under debate — which faces a key procedural hurdle in a Tuesday afternoon vote — blends several provisions aimed at easing the crisis, such as providing $4 billion to communities to purchase and rehabilitate foreclosed homes and improving disclosure of subprime mortgage loans so borrowers won’t be surprised by big payment increases.

Republicans agree with some provisions, such as letting states issue $10 billion in tax-exempt bonds to refinance subprime loans and permitting homebuilders and other money-losing businesses to reclaim previously paid taxes.

But the White House, Republicans and even some Democrats oppose a plan to change bankruptcy laws to allow judges to cut interest rates and reduce what’s owed on troubled borrowers’ mortgages. They say that would force lenders to tighten their standards and raise interest rates.

“There is no way this proposal is going to fly,” said Senate Minority Leader Mitch McConnell, R-Ky.

Tuesday’s developments don’t guarantee a successful result, but both parties are under great pressure to produce a bill that can pass this year. There’s enough common ground for a bill, even though difficult negotiations remain on several fronts.

Republicans have been threatening to block the bill, as they did Feb. 28, unless Democrats promise them opportunities to offer several amendments. But spokesmen for both McConnell and Majority Leader Harry Reid, D-Nev., said negotiators had made great progress in Tuesday morning talks and that the Senate was likely to far exceed the 60 votes needed to allow the measure to advance.

Democrats say they’re open to some GOP options, such as a bill by Sen. Johnny Isackson of Georgia to award $15,000 tax credits to people who buy and move into foreclosed homes. That would sharply boost demand, Isackson says.

The measure could also serve as a vehicle for a plan by Sen. Christopher Dodd, D-Conn., the Banking Committee chairman, to have the Federal Housing Administration guarantee hundreds of billions of dollars worth of refinanced loans if lenders reduce loan amounts to reflect reduced home values. The measure would force banks to make less money on the loans but would also reduce their credit exposure.

The White House says the $4 billion for purchases of foreclosed homes is too expensive and “would constitute a bailout for lenders and speculators, while doing little to help struggling homeowners.”

The provision rewriting the bankruptcy code, the White House says, would allow borrowers to effectively rewrite their mortgage contracts.

The measure also contains money for debt counselors to help homeowners negotiate with lenders.

The moves come on the heels of steps by the Federal Reserve to broker the 11th-hour sale of a major investment firm, the failing Bear Stearns Cos., to a rival. It guaranteed some $30 billion in Bear assets, including questionable mortgage-backed investments. The central bank also allowed investment houses to get emergency loans previously reserved only for commercial banks.

“The federal government has provided assistance to Wall Street, now Congress must turn its attention to Main Street,” Reid said.

Dodd said that about 8,000 homes are being foreclosed on every day.

“Foreclosures of this magnitude are on a par with the severity of foreclosures during the great Depression,” Dodd said. “Each day without action means more are losing their homes.”