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 But he denied he knew he was getting any special deal and said he didn't plan to give up the loans.
"I'm not clairvoyant," Dodd, D-Conn., said. "There was no red flag to me that we were getting some special treatment."
Revelations that Dodd and Sen. Kent Conrad, D-N.D., the Budget Committee chairman, got cut-rate mortgages through a VIP program for friends of Countrywide CEO Angelo Mozilo muddled Democrats' message as they push to complete a massive foreclosure rescue package before Congress breaks for a weeklong July 4 recess.
The package, which also includes tighter regulation for government-sponsored mortgage giants Fannie Mae and Freddie Mac and an array of tax breaks, could come to a Senate vote this week and stands a good chance of drawing substantial bipartisan support. But it faces an uncertain future in the House, where Democrats object to key details.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman in the House, called the emerging package "a very good basis for some negotiations" but said there "are still a couple of important points" of disagreement.
"No one should expect that negotiations between two senators are going to make public policy for the whole country," Frank added, referring to talks between Dodd and Sen. Richard C. Shelby of Alabama, the senior Banking Republican, that produced the bill.
The controversy swirling around Dodd's and Conrad's VIP mortgages has cost Democrats crucial credibility on the issue as they compete with Republicans to portray themselves as the party most sympathetic to the plight of struggling homeowners.
The Senate Ethics Committee is looking into charges by a non-government watchdog group, Citizens for Responsibility and Ethics in Washington, that the special loans violated Senate rules on gifts that forbid knowingly accepting a loan on terms more favorable than those available to the general public.
An announcement by Dodd and Shelby that they had reached agreement on key elements of the housing package was eclipsed by Dodd's comments about his involvement in the VIP program.
Dodd, who has been considered a potential vice presidential running mate to Barack Obama following his own failed bid for the nomination, said he couldn't rule out having met Mozilo at some point, but said he hadn't talked to him about his mortgages.
"I never would," Dodd told reporters. "I mean, the idea that you would call the CEO of a bank to get a mortgage ... I just wouldn't do."
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 Conrad has acknowledged that he spoke to Mozilo by telephone when he was looking for a mortgage to purchase a vacation home in Bethany Beach, Del.
He said Tuesday that he hadn't called Mozilo himself, but happened to talk to him "by serendipity" because the Countrywide executive had been visiting his friend Jim Johnson when Conrad phoned looking for advice on home loans.
Johnson, the former Fannie Mae CEO, resigned from Obama's campaign last week after it was revealed that he, too, got a special deal on a Countrywide mortgage.
"I had no reason to believe, and I had no expectation, that I'd have any sweetheart deal," Conrad said.
Conrad, who also is a senior member of the tax-writing Finance Committee, said he would cooperate fully with an ethics committee investigation and reimburse Countrywide the $10,700 he saved on his vacation home loan through the VIP discount if the panel found a violation of gift rules.
Seeking to put the incident behind him, Conrad has already sent a check in that amount to Habitat for Humanity and refinanced his other Countrywide mortgage through a different company.
Republicans, buffeted by a wave of scandals, retirements and poor fundraising that have contributed to a challenging re-election climate, relished the opportunity to use the VIP loans to turn the tables on Democrats during the housing debate, according to senior GOP aides.
Sen. Jim DeMint, R-S.C., signaled he might try to block the measure, saying, through a spokesman: "The housing bill has a multibillion-dollar taxpayer bailout for a company that reportedly gave preferential loans to members of Congress. This is exactly the type of thing Americans are sick of."
[Associated
Press; By JULIE HIRSCHFELD DAVIS]
Copyright 2008 The Associated
Press. All rights reserved. This material may not be published,
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