updated 5/19/2009 4:34:34 PM ET 2009-05-19T20:34:34

Congress on Tuesday sent the president legislation that encourages banks to spare homeowners from foreclosure, after the industry helped scuttle a tougher measure that would have forced lenders to reduce monthly payments of owners in bankruptcy.

The House voted 367-54 to pass the Helping Families Save Their Homes Act. The Senate had voted 91-5 in favor of the bill and approved the final version by unanimous consent.

"In the last few weeks, we have cracked down on corporate and mortgage scams and helped more struggling homeowners keep their homes," said Senate Majority Leader Harry Reid, D-Nev. "And in the coming weeks, we will continue to protect people ... who keep our economy moving, and we will restore their confidence."

The bill would expand an existing $300 billion program that encourages lenders to write down an individual's mortgage if the homeowner agrees to pay an insurance premium. The program, set to expire in 2011, would swap out a homeowner's high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.

Because of strict eligibility requirements, only 50-some homeowners are refinancing through the program compared to the 400,000 people it was estimated to help.

The legislation would expand eligibility. For example, the program currently bans participants who intentionally defaulted on the mortgage or other substantial debt. The Senate bill would narrow that prohibition to defaults within the last five years.

Not included in the final bill is a measure by Sen. Dick Durbin, D-Ill., that would have allowed bankruptcy judges to reduce a person's mortgage payment. President Barack Obama included the proposal as a key piece of his housing plan and promised to push it through Congress.

But facing stiff opposition from banks, Obama did little to pressure lawmakers who worried it would encourage bankruptcy filings and spike interest rates. The Senate defeated the measure, 45-51.

The bill also would potentially give banks a break on fees they pay to the Federal Deposit Insurance Corporation to insure customers' deposits. The bill increases FDIC borrowing authority from $30 billion to $100 billion, which would allow the agency to reduce the insurance premiums.

In addition, the bill extends through 2013 an increase in deposit insurance by the FDIC from $100,000 to $250,000.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Data: Latest rates in the US

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Home equity type Today +/- Chart
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