UPDATE 2-Bush could get US mortgage plan by early July

(Adds background on Senate action)

By John Poirier

WASHINGTON, April 29 (Reuters) - The U.S. Congress could send a package of proposals for housing and mortgage reform to the White House by July 4, a senior House Democrat said on Tuesday.

Rep. Barney Frank, chairman of the House of Representatives Financial Services Committee, said the package was aimed at saving troubled U.S. homeowners from foreclosure.

The package would include expanded powers for the Federal Housing Administration and other reforms for government-sponsored mortgage finance companies, he said.

"I think it's possible to do this," Frank told reporters after speaking at a banking conference.

Asked if he expects President George W. Bush to veto the FHA proposals on concerns taxpayer money would be put at risk for home loans, Frank replied "not at this time."

In his speech before the Independent Community Bankers of America trade group, Frank said, "This administration started out very skeptical of Fannie Mae and Freddie Mac.

"It is now clear, given where we are, that Fannie Mae and Freddie Mac are indispensable sources of liquidity in the housing market."