WASHINGTON -- Sen. Christopher Dodd, a top figure in Democrats' response to the housing crisis, defended through a spokesman two mortgages he reportedly received under a special Countrywide Financial Corp. program that awarded preferential interest rates to people referred to as "friends" of the company's chairman and chief executive, Angelo Mozilo.

"The Dodds received a competitive rate on their loans," said Bryan DeAngelis, Sen. Dodd's press secretary. "They did not seek or anticipate any special treatment, and they were not aware of any." He declined further comment.

The news could cause headaches for the Connecticut senator, who is trying to negotiate housing legislation designed to deal with the foreclosure crisis. The final bill could include expanding a government program to insure up to $300 billion in refinanced home loans.

Publicly, Mr. Dodd has been critical of some of the mortgages in which Countrywide specialized, such as loans known as "payment-option ARMs," adjustable-rate mortgages that give borrowers multiple payment options each month. In December 2007, he co-signed a letter to Federal Reserve Chairman Ben Bernanke that called these mortgages at Countrywide "abusive" because "these loans were not made on the basis of a borrower's ability to pay."

The "Friends of Angelo" program was first disclosed by The Wall Street Journal on Saturday and focused on former Fannie Mae Chief Executive James Johnson. Mr. Johnson resigned from Sen. Barack Obama's vice-presidential-search task force because of loans he received from the mortgage lender under the little-known program.

Condé Nast Portfolio magazine reported Sen. Dodd's participation in the program, among a handful of other Washington luminaries, on its Web site late Thursday. A spokesman for Countrywide, of Calabasas, Calif., didn't return a message seeking comment.

Portfolio said Countrywide made two loans in 2003 at special rates to Sen. Dodd: a $503,000 loan to refinance a Washington townhouse and a $275,042 loan to refinance a loan on a home in East Haddam, Conn. The article said Countrywide waived fractions of points on the loans, a move that likely saved Sen. Dodd money. Portfolio said the lower interest rates could have saved Sen. Dodd a combined $75,000 during the life of the 30-year loans, though this could be difficult to measure because the mortgages were reportedly adjustable-rate loans.

Write to Damian Paletta at damian.paletta@wsj.com

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