By Benton Ives, CQ Staff

As shares of Fannie Mae and Freddie Mac were battered again Friday, the Senate sent a regulatory overhaul of the two mortgage finance giants back to the House for action.

Senators voted 63-5 to clear a final procedural hurdle, returning the measure (HR 3221) to the House. The package includes a landmark overhaul that would put in a place a strong federal regulator for Fannie Mae and Freddie Mac with broad powers to limit the companies’ mortgage portfolios and set capital levels.

The legislation also includes a modernization of the Federal Housing Administration and a $300 billion expansion of the FHA’s loan insurance programs aimed at helping borrowers avoid foreclosure.

Fannie and Freddie are both government sponsored enterprises, or GSEs, that operate with an implied, but not explicit, government guarantee. But problems with the economy, and more specifically, the continuing crisis in the housing market, have taken a steep toll on the companies.

Recent reports have suggested the government might step in and take control of Fannie and Freddie if they were in danger of collapsing.

But Treasury Secretary Henry M. Paulson Jr. moved to reassure investors that a government takeover was not imminent.

“Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission,” Paulson said in a statement.

“We appreciate Congress’ important efforts to complete legislation that will help promote confidence in these companies,” Paulson added. “We are maintaining a dialogue with regulators and with the companies.”

While the housing bill has slogged through Congress, investors have dumped shares of Fannie and Freddie this week, sending share prices plummeting.

Key Senate lawmakers say the companies’ troubles mean Congress should step up efforts to put a new regulator in place, if only to build confidence for jittery stock holders.

“The first and most important step Congress must take is to move expeditiously to put a stronger GSE regulator in place,” said Jonathan Graffeo, a spokesman for Sen. Richard C. Shelby of Alabama, the ranking Republican on the Senate Banking, Housing and Urban Affairs panel. “The Senate and House should move immediately to pass and get to the president’s desk the GSE reform pending before the Senate,”

Shelby has been a long-time advocate of overhauling Fannie and Freddie, in large part because he worries their massive mortgage portfolios present a systemic risk to the economy should one or both fail.

Banking Chairman Christopher J. Dodd , D-Conn., said Fannie and Freddie were not in danger of collapse, despite the massive sell-off.