As hundreds of thousands of homeowners nationwide face potential foreclosure, a heated battle is brewing in Congress over how to address the sub-prime mortgage meltdown.The mortgage woes are hitting California particularly hard, with 57,875 of the nation’s 243,947 foreclosures being filed in the Golden State, according to the Irvine-based RealtyTrac Inc.Los Angeles County accounted for nearly 12,000 of the month’s foreclosures.But while legislation moved forward last week to allow judges to modify the terms of a home’s first mortgage in a bankruptcy proceeding, it faced fierce objections from Republicans who said it would drive up interest rates. Last week, the House approved some relief for homeowners, changing tax law so that debt forgiven to those unable to repay a mortgage would no longer be treated as taxable income.Meanwhile, Democrats are pressing President Bush to appoint a special adviser to coordinate a federal response to the crisis.Sanchez’s bill — supported by Reps. Zoe Lofgren, D-San Jose, and George Miller, D-Martinez — would revise the bankruptcy law to help homeowners facing foreclosure by repealing a provision that forbids judges from modifying a home mortgage.Calling the proposal “a measured response to the mortgage crisis,” Sanchez said current law — which allows judges to restructure loans for a vacation home or an investment property but not a primary residence — is “fundamentally unfair.”She said her measure could save up to 600,000 homeowners from foreclosure.While the bill passed a subcommittee on a 5-4 party-line vote, the mortgage industry has vowed to continue fighting it.That’s because industry officials maintain that letting judges rewrite loan terms would destabilize mortgage-backed securities, dry up capital and push up interest rates.“We want to help you, but I do not want to help you to hurt you,” Utah Republican Rep. Chris Cannon said in opposing the measure.Cannon said the measure would hurt would-be homeowners’ ability to buy property in the future — and may even trigger a recession.He called it an “overreaction” to the crisis, adding, “Who stands to benefit from this law? Bankruptcy lawyers.”Rep. Brad Sherman, D-Sherman Oaks, who is on the House Financial Services Committee, said he is still studying the legislation, but cautioned that Congress can’t turn home mortgages into unsecured loans.“Lenders have got to be pushed to work with the borrower,” he said.He also pushed for Senate passage of a measure the House approved earlier this year that raises the limit on the size of loans that Fannie May and Freddie Mac can buy in high-cost areas like the San Fernando Valley.The current limit is $417,000 — too low to help valley residents trying to refinance or sell in order to avoid foreclosure, he said.In the meantime Sherman, Sanchez and others are calling for an end to “teaser rates” to protect against future crises.And Rep. Barney Frank, D-Mass., is expected to unveil legislation this year addressing broker and lender duties.But government watchdogs noted that both the real estate and mortgage industries are major campaign contributors with friends in both parties.Last year, real estate agents gave members of Congress $33 million — 42 percent to Democrats and 53 percent to the GOP.Mortgage bankers, meanwhile, gave $1.2 million with 41 percent going to Democrats and 58 percent to Republicans, according to the Center for Responsive Politics.“No matter what area you represent, your constituents own homes, so the industry has an interest in having your ear. They spread their money,” said Massie Rich, spokesman for the Washington, D.C.-based nonprofit watchdog group.But, he noted, those same homeowners stand a strong chance of trumping special interests.“In the end, votes are what get you elected, not money,” he email@example.comWant local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! Still, with the peak problems linked to rising adjustable rates that are expected to move even higher, pressure is mounting on lawmakers and the Bush administration to take quick action.“I hear from families a lot, families that were stretched to get into their first home,” said Rep. Linda Sanchez, D-Lakewood, who sponsored last week’s measure. “They’re worried.”Many homeowners facing foreclosure were initially able to take out mortgages with small or nonexistent down payments by obtaining an adjustable rate — sometimes called a “teaser” rate.But the percentage points on those rates are climbing, catching homeowners in the bind of being unable to refinance.As many as 2.5 million adjustable-rate mortgages — worth about $600 billion — are expected to jump from “teaser” rates to higher rates this year and next.