Borrowers also would have a responsibility to prove that they tried to modify their mortgages with their lenders before seeking help in Bankruptcy Court.
"If there is modification available, you would prefer that than a bankruptcy," said Representative Zoe Lofgren, a California Democrat, one of the centrist negotiators on the bill.
Democrats said the goal was to make bankruptcy clearly a last resort for homeowners in danger of losing their homes.
Mortgage lenders who mounted a costly and successful effort last year to kill the measure, which they call the "cramdown," have been lobbying intensely to restrict the bill.
They argued that mortgage adjustments made in bankruptcy would raise mortgage interest rates for all consumers and create a wave of bankruptcy claims.
Their opposition helped derail the bill last week, even after leading Democrats had agreed to restrict it to people who had tried other means of reworking their mortgages and those who couldn't afford their home loans.
The industry has "been giving it everything they've got," said Representative Brad Miller, Democrat from North Carolina, an architect of the legislation. "They still have remarkable influence." Still, Miller and some other backers of the idea said they support the new plan. "It would encourage lenders to make modifications and there would be consequences if they don't do it," Miller said.
Democrats discussed the compromise in a closed meeting yesterday with Housing Secretary Shaun Donovan, who told them the legislation would dovetail with the administration's overall efforts to reduce foreclosures.
