The Senate on Tuesday moved closer to passing a housing bill after defeating two amendments that would weaken legal protections for residential servicers engaged in loan modifications and potentially handcuff the Federal Housing Administration's (FHA) single-family program.

The bill (S-896) includes improvements to the FHA Hope for Homeowners program to refinance underwater mortgages and increases Federal Deposit Insurance Corp.'s borrowing authority to deal with rising bank failures. The legislation also tries to increase loan modifications by creating a "safe harbor" that protects servicers from investor lawsuits.

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