WASHINGTON — The Senate moved against the worsening mortgage crisis, voting to make it easier for thousands of homeowners with ballooning interest rates to refinance into federally insured loans.

The legislation, approved 93-1 yesterday, would allow the Federal Housing Administration to back refinanced loans for borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

The bill also tries to make FHA loans more attractive than risky subprime loans by accepting lower down payments and expanding the eligibility for counseling for homeowners having difficulty with their mortgage payments.

An estimated 2 million to 2.5 million adjustable-rate mortgages are scheduled to reset in the next year, jumping to much steeper rates that could cost borrowers their homes. The wave could crest during the presidential and congressional election campaigns next year, and politicians have been wrestling with what the government's response should be.

The Senate's proposed changes are especially important now, given the credit crisis that has made it much more difficult and more expensive for people to refinance or get financing to buy a home. Private lenders have been reluctant to make new loans.

Allowing the federal government to insure more and bigger loans should help provide some relief and ease the credit crunch.

The Senate's plan would give homeowners "the option of refinancing to an FHA-backed loan with the peace of mind that comes with it," said Senate Majority Leader Harry Reid, D-Nev. "And for future home buyers, a fully backed FHA loan with honest, upfront terms will help prevent crises like we now face."

Modernizing the FHA is Congress' first attempt at stand-alone legislation to ease the subprime mortgage mess. The House passed a bill similar to the Senate's back in September, but a final measure probably won't be ready for President Bush's signature until next year.

The nonpartisan Congressional Budget Office estimated that the Senate's changes would result in an 8 percent increase in FHA loans — $4 billion annually in additional loan guarantees — over the next five years.

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