Senator Chris Dodd (D-CT) and Senator Richard Shelby (R-AL), Chairman and Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, said Monday evening that they had reached an agreement the so-called Federal Housing Finance Regulatory Reform Act of 2008. The housing package, which had been stalled in committee due to strong objections by Republicans, includes a broad proposal to expand the mortgage insurance offered by the Federal Housing Administration as well as provisions to establish a new regulator for Fannie Mae (FNM) and Freddie Mac (FRE). A deal between Senate Democrats and Republicans had been widely expected after both parties suggested they were close to a deal last Friday. “This legislation is good news for both the markets and homeowners,” said Dodd. “The bill addresses the root of our current economic problems – the foreclosure crisis – by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes.” While no details on the bipartisan legislation were released Monday, Dodd’s suggestion that the bill comes at no cost to taxpayers — and the mention of a “new fund that will help create more affordable housing for millions of Americans” in a press statement Monday evening — buttresses earlier reports that suggested funding for the proposed FHA expansion would come from an affordable housing pool funded by both GSEs. “I am hopeful that the Banking Committee will deliver both by passing this legislation tomorrow,” Dodd said. The Senate Banking Committee is scheduled to mark up the bill at 10:30am EST on Tuesday. Shelby, for his part, signaled his support of the package — likely a presage to support from President Bush, as well, sources told Housing Wire on Monday evening. “I’m proud to join Chairman Dodd in announcing this agreement,” said Shelby. “My primary consideration during negotiations on this package has been to protect the American taxpayer, and I believe we’ve made significant progress toward that goal on each component.” President Bush has strongly opposed the House’s version of a housing relief package, suggesting that it comes at too high a cost for taxpayers and bails out lenders and borrowers alike. Sources on Capitol Hill informed Housing Wire that the agreement with Shelby likely signals the administration’s implicit approval of the Senate’s version of the housing relief bill. Disclosure: The author held no positions in FNM or FRE when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.