WASHINGTON - The Senate Ethics Committee is looking into special loans to Sen. Kent Conrad, who said Tuesday he happened to talk to an executive of Countrywide Financial Corp. "by serendipity" and not because he wanted a preferential treatment.

The Ethics Committee is looking into charges by a non-government watchdog group, Citizens for Responsibility and Ethics in Washington, that the special loans to Conrad, D-N.D., the Senate Budget Committee chairman and Sen. Christopher J. Dodd, D-Conn., the Senate Banking Committee chairman, violated Senate rules on gifts that forbid knowingly accepting a loan on terms more favorable than those available to the general public.

The revelations that Dodd and Conrad got cut-rate mortgages through a VIP program for friends of Countrywide CEO Angelo Mozilo have muddled Democrats' message as they push to complete a massive foreclosure rescue package before Congress breaks for a weeklong July 4 recess.

Conrad has acknowledged that he spoke to Mozilo by telephone when he was looking for a mortgage to purchase a vacation home in Bethany Beach, Del.

He said Tuesday that he hadn't called Mozilo himself, but happened to talk to him because the Countrywide executive had been visiting his friend Jim Johnson when Conrad phoned looking for advice on home loans.

Johnson, the former Fannie Mae CEO, resigned from Barack Obama's campaign last week after it was revealed that he, too, got a special deal on a Countrywide mortgage.

"I had no reason to believe, and I had no expectation, that I'd have any sweetheart deal," Conrad said.

Conrad, who also is a senior member of the tax-writing Finance Committee, said he would cooperate fully with an ethics committee investigation and reimburse Countrywide the $10,700 he saved on his vacation home loan through the VIP discount if the panel found a violation of gift rules.

Dodd acknowledged Tuesday that he knew in 2003 that Countrywide Financial Corp. placed him in a "VIP section" when the firm reportedly gave him preferential rates on two mortgages.

But he denied he knew he was getting any special deal and said he didn't plan to give up the loans.

"I'm not clairvoyant," Dodd, D-Conn., said. "There was no red flag to me that we were getting some special treatment."

Dodd, who has been considered a potential vice presidential running mate to Obama following his own failed bid for the nomination, said he couldn't rule out having met Mozilo at some point, but said he hadn't talked to him about his mortgages.

"I never would," Dodd told reporters. "I mean, the idea that you would call the CEO of a bank to get a mortgage … I just wouldn't do."

Seeking to put the incident behind him, Conrad has already sent a check in that amount to Habitat for Humanity and refinanced his other Countrywide mortgage through a different company.

Republicans, buffeted by a wave of scandals, retirements and poor fundraising that have contributed to a challenging re-election climate, relished the opportunity to use the VIP loans to turn the tables on Democrats during the housing debate, according to senior GOP aides.

Sen. Jim DeMint, R-S.C., signaled he might try to block the measure, saying, through a spokesman: "The housing bill has a multibillion-dollar taxpayer bailout for a company that reportedly gave preferential loans to members of Congress. This is exactly the type of thing Americans are sick of.