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.

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 January 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 or Freddie Mac on homes whose values have dropped. This plan would allow homeowners to refinance at market rates with a loan-to-value ratio of up to 105 percent, rather than the normal Fannie/Freddie 80 percent limit.

(Reporting by David Lawder, Editing by Chizu Nomiyama)