The Obama administration kicked off the “Making Home Affordable” initiative, a $75 billion loan modification program, which runs through 2012. To qualify for this mortgage loan relief program, borrowers will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship”.

Homeowners are only allowed to have their home loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

The legislation that gives bankruptcy judges the power to force lenders to lower mortgage rates or principal balances has been narrowed. Now, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their home mortgage loans. The compromise in legislation is expected to come to a vote in the House as early as Thursday.