Earlier, in an interview on CNBC, Sen. Richard Shelby said a deal was near.
"We're still talking. We're real close, we're this close, but we could be that far away, too," the Republican from Alabama said. "We're trying to put a package together, a meaningful package that both sides can live with. If we're able to do this, we'll move the legislation."
Last week, the House approved legislation that would to create a $300 billion mortgage-insurance fund and provide billions more in homeowner aid to stabilize a housing market shaken by a wave of foreclosures and a credit crunch.
The package sponsored by Democratic Sen. Christopher Dodd of Connecticut would boost government guarantees for failing home loans and create a new regulator for government-sponsored housing finance companies Fannie Mae and Freddie Mac .
Industry sources close to the negotiations over the bill said staff for Dodd and Shelby, the panel's top Republican, had worked into the early morning hours to try to reach a deal, but the sources cautioned that the effort could still fall through.
At the heart of the negotiations are questions about how to pay for a proposed government mortgage guarantee program and how a new regulator should oversee Fannie Mae and Freddie Mac, sources said.
Shelby said he opposes a bailout for irresponsible borrowers.
"We can't bail out everybody, and we shouldn't bail out speculators, we shouldn't bail out people who probably shouldn't have bought a home to begin with and probably won't pay if they're refinanced," he said.
-- Reuters contributed to this report.