Chairman Tim Johnson, D-S.D., and Sen. Mike Crapo, R-Idaho, the panel's ranking member, are likely to release details of their bill within the next two weeks, according to several sources tracking the negotiations.
"Indications are that they are very close to sharing legislation with everyone, if not introducing it entirely," said James Ballentine, executive vice president of congressional relations and political affairs at the American Bankers Association.
But it's clear the lawmakers are also running out of time to make significant legislative progress on their bill.
Johnson and Crapo began serious work on the issue in the fall, when they began holding a series of hearings and meetings with industry stakeholders. Behind the scenes, activity has spiked during the past two months as committee staff have worked nights and weekends to draft text and reach a final deal.
"The clock is ticking and every day that goes by makes it all the more difficult," said Edward Mills, a policy analyst at FBR Capital Markets, adding that "end of March would be the latest" to release a bill for it to gain any traction.
The stakes for the committee and the financial services industry are high. If the lawmakers fail to reach an agreement on a reform plan by spring, it's likely to put the issue on hold for at least a year and could set back efforts to overhaul Fannie Mae and Freddie Mac indefinitely.
Still, it appears for now that Johnson and Crapo are making progress. The two lawmakers issued a rare joint statement last week, reiterating that the issue remains the "top priority" for the committee.
"With the hearing and information-gathering stage behind us, our hard work continues as we dive deep into the drafting and negotiating phase of housing finance reform," Johnson and Crapo said, adding that they "recognize that we must build a broad bipartisan consensus for an agreement to have a chance at becoming law."
While it provided little in the way of detail on what to expect or when to expect it, observers said the tone of the statement bodes well for the ongoing efforts.
"The fact that it was a joint statement is significant, and that they actually mentioned pen on paper is significant," said Brandon Barford, a partner at Beacon Policy Advisors.
But actual details of the bill have been closely guarded, which may speak to the trust cultivated between the two lawmakers and a genuine interest in producing legislation.
"I believe that the negotiating process is being tightly controlled, and that means folks are serious about getting something done," Barford added. "If you start seeing sections or whole titles floating around town, then someone is negotiating in bad faith."
Johnson and Crapo are expected to draw on a bipartisan framework to unwind Fannie Mae and Freddie Mac introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., last summer. That bill created an explicit backstop for the housing market, but required private lenders to hold a 10% loss position on any loans guaranteed by the government.
But Johnson and Crapo are likely to put their own touches on the legislation, including providing more detail on how to structure the multifamily housing market and the transition to a new system. They are also looking at the design and role of Corker-Warner's proposed housing regulator, the Federal Mortgage Insurance Corp.
Many observers think Johnson and Crapo could also deviate from the 10% first-loss requirement, though how far is unclear. Corker has previously vowed to fight efforts to reduce the level of capital required of private firms but Johnson and Crapo are said to want more flexibility during economic downturns.
The banking panel leaders will also have to curry support from other members of the committee—particularly the six Democrats on the committee who did not sign on to the original Corker-Warner plan—as they continue to negotiate with each other.
Johnson and Crapo need strong support for the bill during any committee vote if the legislation has a chance of making it to the Senate floor. Part of the balancing act Johnson and Crapo face is keeping the original bipartisan coalition of 12 lawmakers that supported Corker-Warner on board, while attracting additional panel members.
Legislation is "possible, as long as they don't do what happens far too often—we get pulled apart based on the extremes of either party," said David Stevens, president and chief executive of the Mortgage Bankers Association. "In our view, this committee has an obligation to do something substantive. It's hard work and it won't happen if they each go to their corners."
That helps to explain why Johnson and Crapo have taken so long to unveil a bill, observers said. It's difficult to craft legislation that addresses the complexities of housing reform and brings in additional members, said Dwight Fettig, former staff director for Johnson and a partner at Porterfield, Lowenthal, Fettig & Sears.
"It's more important for the future success of housing finance reform to take the time necessary to get a strong vote out of the committee," he said.
But pressure on the banking panel is mounting from the White House and others to get an agreement in place before Congress turns its focus to the midterm elections—particularly after the committee blew past an earlier self-imposed deadline to reach an agreement by the end of 2013.
President Obama asked Congress during his State of the Union address to send him housing reform legislation, and Michael Stegman, a top advisor at the Treasury Department, reiterated the administration's commitment to mortgage finance reform in remarks last month. Gene Sperling, director of the White House's National Economic Council, said last week that time is of the essence to get a deal done.
"All of us ... are making it understood that everyone needs to feel a sense of urgency in moving forward quickly while there is still a window for bipartisan progress in 2014," he told The Wall Street Journal.
The Treasury Department is engaged with the Banking Committee on the legislation, and some administration officials, including Sperling and Shaun Donovan, secretary for Housing and Urban Development, are said to have begun reaching out to the remaining Democrats on the panel.
"If we don't get something done this year," Donovan said during a Politico event on Wednesday, "we could end up in a place where reform is much harder to get to."