Democratic efforts to let bankruptcy judges rewrite mortgages for strapped borrowers won't make it through Congress this year, the chairman of the House Financial Services Committee said Tuesday.

Rep. Barney Frank, D-Mass., told The Associated Press in an interview that the only thing lawmakers can do to get lenders to help struggling homeowners avoid slipping into default is to threaten the lenders with tougher regulation in the future.

"The only other thing we can say to them is, 'If you don't do this, then there are going to be tougher rules going forward than there might otherwise have been,"' said Frank, who plans to meet with mortgage servicers Wednesday.

Servicers will have to take losses on distressed loans "whether they like it or not," he said.

Frank predicted that Democrats running Congress and President Bush will agree this year on a broad housing package that could help hundreds of thousands of struggling homeowners get into lower-cost, government-backed loans.

The darkening economic picture and the political calendar are giving lawmakers and the White House a powerful incentive to act.

"People are very afraid of being accused of not having done something to avoid (a) longer and deeper recession," Frank said.

His package, scheduled for a committee vote next week, would allow the Federal Housing Administration to back as much as $300 billion in mortgages to struggling homeowners. Servicers would have to agree to take a loss on the existing loans, while borrowers would have to show they could afford to make new payments on their refinanced mortgages.

A broader effort to impose stricter financial regulation on investment banks and other institutions will wait until next year, Frank said.

Liberal groups and consumer advocates argue the bankruptcy change — supported by both Democratic presidential candidates, Hillary Rodham Clinton and Barack Obama — is needed to help hundreds of thousands of homeowners avoid foreclosure. Critics argue it would hurt borrowers in the long term by prompting lenders to raise interest rates.

The Senate rejected the measure before passing a housing bill last week, and Frank said it had little chance of being resurrected in the House.

"If we do do it, I think it's not going anywhere," Frank said.