WASHINGTON — With Sen. Jack Reed providing a crucial piece of the compromise, a key Senate committee overwhelmingly sealed a deal yesterday that could help hundreds of thousands of homeowners refinance their troubled mortgages — with the blessing of President Bush.

The Senate Banking Committee cleared the foreclosure prevention package on a vote of 19 to 2, sending the full Senate a loud, bipartisan signal that, according to Chairman Christopher J. Dodd, might spell enactment of broad mortgage relief — along with a strong dose of banking reform and low-income rental housing aid — by July 4.

“Now we can respond to three pressing concerns: keeping people in their homes” by preventing foreclosure, creating the housing program for the poor, and paying for both with a special new surcharge on Fannie Mae and Freddie Mac, said Rhode Island Democrat Reed, a committee member in the bipartisan talks that forged the compromise.

Dodd, a Connecticut Democrat, and Alabama Sen. Richard Shelby, the ranking Republican on the panel, credited Reed with a key role in fashioning the so-called “pay-for,” a levy on Fannie Mae and Freddie Mac that allayed Republican concerns about what some have portrayed as a taxpayer bailout of ill-advised mortgages.

Shelby stated flatly that Mr. Bush — who has threatened to veto the mortgage relief package that passed the House last week — will not veto an anti-foreclosure bill akin to what the Senate panel produced yesterday. Mr. Bush said last week that the House bill would help “speculators and lenders,” while risking taxpayer money.

The Senate bill would raise an estimated $500 million — less than one-fifth the projected cost of the House version of the bill — by collecting just over half a penny on each dollar’s worth of mortgages issued through Freddie Mac and Fannie Mae. The Senate version of the foreclosure remedy would assist an estimated 500,000 families, according to Dodd.

The Senate bill reduces the cost of the aid package in part by limiting its life to three years.

In the first year of its existence, 65 percent of the new fund would go to finance federally backed mortgage insurance that would rescue homeowners from foreclosure by allowing lenders to reduce the outstanding principal owed on troubled mortgages. The loans could then be rewritten as long-term, fixed-rate mortgages. Much of the foreclosure crisis is attributable to adjustable rate mortgages that proved too expensive for homeowners when they were adjusted upward.

The remainder of the fund, 35 percent, would be used to help expand the pool of housing that poor people can afford. The Department of Housing and Urban Development would administer the new program through state agencies such as Rhode Island Housing.

In the second and third years of the program, the fraction of the fund devoted to the low-income housing aid would expand, while the fraction devoted to troubled mortgage relief would shrink.

Congressional liberals, including Reed and House Banking Committee Chairman Barney Frank, D-Mass., have long viewed fees on Fannie Mae and Freddie Mac — the huge, government-backed companies that largely finance the U.S. mortgage market — as a potential source of revenue for expanding low-income housing assistance.

Rhode Island’s foreclosure rates on subprime mortgages are among the highest in the nation. Foreclosure initiations almost tripled, to more than 1,000, during the first quarter of the year, according to calculations by Rhode Island Housing. The state also faces an acute shortage of affordable housing for poor residents.

Reed, Dodd and Shelby all pointed to their compromise bill as a potential source of stability — not only for the troubled housing market but for the economy at large. The purpose of the bill, according to Dodd, is to “put a floor” beneath a market that has plummeted in recent months, with serious consequences for the nation’s growth as well as for hundreds of thousands of individual homeowners.

jmulligan@belo-dc.com