Democratic leaders on Wednesday called on President Bush to appoint a “mortgage czar” to coordinate the federal response to the subprime mortgage crisis, saying the administration’s response so far has been inadequate. Senate Majority Leader Harry Reid, D-Nev., characterized the mortgage woes and the accompanying wave of foreclosures as a “national crisis” and said the administration had been slow to recognize the problem.The new special adviser would serve as a watchdog to monitor the markets for potential problems and work with regulators.Atop the Democrats’ agenda are proposals to overhaul the Federal Housing Administration (FHA) and increase the role of the mortgage finance giants Fannie Mae and Freddie Mac in boosting the markets.In more immediate action, the House is expected to vote Thursday on a measure (HR 3648) to help ease the tax burden on some homeowners facing foreclosure, and a House panel will mark up a bill (HR 3609) to modify certain bankruptcy rules to help people seeking to restructure home loans.Sen. Richard C. Shelby, R-Ala., ranking member of the Banking, Housing and Urban Affairs Committee, said the ideas being promoted by Democratic leaders were already under consideration.Shelby said officials at Treasury and the Federal Reserve are handling the subprime crisis and little would be gained by the addition of a new adviser. “Their efforts should continue unimpeded by another layer of bureaucracy,” he said.The House has passed a regulatory overhaul of Fannie Mae and Freddie Mac (HR 1427) and a bill to modernize the FHA (HR 1852).Christopher J. Dodd, D-Conn., who chairs the Senate Banking Committee, said his panel is “committed to working with the president to get FHA modernization legislation to his desk shortly.”Reaching a deal on Fannie and Freddie could prove more difficult. Democrats want the administration to further raise the investment portfolio caps on Fannie and Freddie, which together total about $1.5 trillion.Recently, Fannie and Freddie’s regulator said the government-sponsored enterprises (GSEs) could make relatively small increases in their portfolios. Lawmakers have said that the response is not enough.Sen. Charles E. Schumer, D-N.Y., plans to offer legislation to temporarily boost the portfolio caps by 10 percent. Fannie and Freddie would be required to use at least 80 percent of the money freed up by the change to help struggling subprime borrowers refinance loans.Meanwhile, discussions with the administration on steps that could be taken without legislation are progressing.The administration has suggested that any portfolio increases should be part of a broad overhaul of Fannie and Freddie. Both companies weathered major accounting scandals in recent years.Democrats are unlikely to tackle a broader overhaul and are leaning toward addressing the portfolio increase as a stand-alone issue. Barney Frank, D-Mass., who chairs the House Financial Services Committee, suggested that a temporary, subprime-focused portfolio increase could be acceptable.Schumer also called for action: “We should not wait for the full GSE reform to get the needed relief, because in the next three to six months things are going to get very bad.” About 2 million American homeowners are at risk of losing their homes to foreclosure. That includes many subprime borrowers who purchased mortgage products that are now resetting to much higher payment rates.Elsewhere, the House Judiciary Commercial and Administrative Law panel will mark up the bill that would allow bankruptcy courts to modify the terms of a home mortgage, a step not allowed under law.Rep. Brad Miller, D-N.C., said the changes could help keep as many as 600,000 people in their homes over the next two years by allowing them to restructure the terms of their loans. On the House floor, lawmakers are likely to approve the measure that would remove a tax quirk that can hit homeowners whose debt is forgiven through foreclosure, sale or loan restructuring. The bill is similar to an administration proposal, though the president prefers a temporary provision that would not be offset with new revenue