WASHINGTON (Reuters) - A senior US Senate Democrat yesterday left open the chance of reconsideration and compromise on a housing bill that was blocked last week by Republicans amid a growing mortgage finance crisis.

"There's a chance to bring back the housing bill," Sen. Charles Schumer told Reuters in an interview.

The New York lawmaker, who chairs Congress' Joint Economic Committee, said he has spoken with Senate Republicans who would "like to come up with a compromise".

He said Democratic leaders are open to changes on the bill, which included a provision to let judges erase some of the mortgage debt of homeowners in bankruptcy — a controversial proposal backed by homeowner advocates and opposed by bankers.

Schumer said that Senate Majority Leader Harry Reid has made it clear that if the Republicans "want to do an amendment to try and knock out the bankruptcy piece, that would be in order. That's relevant to the bill."

He added that "we are not saying it has to be exactly our way. But what we are saying is we want to debate housing".

He said the Senate will get bogged down if Republicans try to piggy-back other initiatives on the housing bill.

With home foreclosures rising, home values falling and credit markets locking up from a sub-prime mortgage meltdown, some lawmakers are growing anxious about doing something more than last month's $168 billion economic stimulus bill.

Late last year, US home foreclosures hit a record, the Mortgage Bankers Association said yesterday.

Senate Banking Committee chairman Christopher Dodd sounded frustrated in remarks on the Senate floor on Wednesday.

"The failure of this institution to respond in a more responsible way is deeply regrettable ... Doing nothing is not an option, and yet that is what's happening at this very hour," the Connecticut Democrat said.

He added he expects to introduce within days a bill to set up a federal "home ownership preservation agency ... (to) facilitate the refinancing of distressed mortgages".

Last week Senate Republicans blocked the housing bill, and its bankruptcy law rewrite, with a filibuster threat — a procedural manoeuvre that they are using frequently.

The White House had threatened to veto the bill, saying it was too costly and calling it a bailout for lenders and speculators.

Senate Republican Leader Mitch McConnell said Monday he hoped to bring both parties back to the table on housing.