Efforts to advance a bipartisan overhaul of Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) received a have jolt as the talks between top lawmakers on the Senate Banking Committee and a group of Democrats broke down Thursday.

Fannie Mae Freddie Mac Glassman

According to Nick Timiraos of The Wall Street Journal, the latest move raises the prospect that the bill won’t advance beyond the committee this year.

Johnson-Crapo bill

In March, U.S. Senators Tim Johnson and Mike Crapo made a new proposal for reforming the U.S. mortgage industry. It falls in line with last year’s proposal from Bob Corker and Mark Warner. The proposal would set up a system of private companies that release a common security, much like how Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) sell securitized mortgages under the current system.

However, last week the U.S. Senate Banking Committee indefinitely delayed a vote to dismantle Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) amid disagreements among Democrats over the measure and a mounting campaign to keep the mortgage buyers alive.

Efforts to garner support

Lawmakers tried last week to wrest more support from the 22-member panel. The lawmakers said last week that they could have passed the bill with a narrow majority, but many analysts believe a larger “supermajority” would be needed to compel Sen. Majority Leader Harry Reid (D., Nev.) to bring the bill up for a floor vote ahead of the November midterm elections. Efforts were made to win three of the six uncommitted Democrats on the panel: Sen. Elizabeth Warren of Massachusetts, Sen. Charles Schumer of New York and Sen. Robert Menendez of New Jersey.

Charles Gabriel, a policy analyst at Capital Alpha Partners LLC in Washington, in a report Thursday said: “Not only is the effort all but dead for this Congress,” but the general overhaul infrastructure outlined by the bill “has experienced a serious blow.”

Moreover, others believe the loss of support from all six remaining Democrats would ensure the bill will never pass the Senate.