updated 12/14/2007 1:05:37 PM ET 2007-12-14T18:05:37

The thousands of Americans facing foreclosure because of ballooning interest rates on their variable-rate mortgages would get help from the federal government under legislation overwhelmingly approved by senators Friday.

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The legislation, approved 93-1, is the Senate's first attempt to deal with the looming subprime mortgage crisis through stand-alone legislation.

The bill would allow the Federal Housing Administration to guarantee refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

Around 2 million to 2.5 million adjustable-rate mortgages are scheduled to "reset" this year and next and will jump from the "teaser" rates of the first two or three years to much steeper rates that could cost borrowers their homes. Many thousands of homes have been lost to the process since subprime loans taken out during a housing boom of the early 2000s began going to higher rates in 2005.

The wave of resets could crest during the presidential and congressional election campaigns next year, and the issue has brought politically charged debate in recent weeks over possible responses by the government.

The House already passed its version of FHA reform, and now lawmakers will take the two versions of the bill to a conference where differences are worked out. The bill will then be presented to U.S. President George W. Bush to be signed into law.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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