(Adds details from Treasury guidelines, regulator statement)
WASHINGTON, March 4 (Reuters) - The Obama administration on Wednesday gave lenders a green light to begin modifying home mortgages under a new $75 billion program aimed primarily at people facing imminent financial hardship.
Unveiling eligibility guidelines for a foreclosure prevention plan first announced on Feb. 18, the U.S. Treasury said borrowers would be required to demonstrate hardship to their loan servicers, such as a job loss, reduction in income or a looming payment increase that cannot be met.
They must also fully document income and prove occupancy.
The program, which provides cash incentives to loan servicers to reduce monthly payments, will only modify single-dwelling mortgages up to $729,750 originated before Jan. 1, 2009. Loans on owner-occupied two-unit dwellings can be modified up to $934,200, and 4-unit dwellings up to $1.403 million.
The Federal Reserve Board and other U.S. banking regulators on Wednesday voiced support for the modification program, saying that they would strongly encourage lenders to participate.
"By providing servicers and holders of eligible residential mortgages with incentives to modify loans at risk of foreclosure, the program will promote sustainable alternatives to foreclosures on owner-occupied residential properties," the regulators said in a joint statement. "These incentives should help make affordable loan modifications more attractive than foreclosure."
The Treasury also announced that lenders on Wednesday could
begin refinancing current mortgages owned or guaranteed by
Fannie Mae