WASHINGTON (AP) – Homeowners seeking relief under the Obama administration’s mortgage aid program will be required to provide proof of their incomes upfront, a significant reversal for the problem-plagued effort to stem the foreclosure crisis.

Borrowers had been able to state their income verbally and provide documentation later. Mortgage companies, however, said many borrowers didn’t return the documents, sparking fears that thousands of people will be kicked out of the program this winter.

Only about 66,500 borrowers, or 7 percent of those who signed up, had completed it as of December.

Lenders will now be required to collect two recent pay stubs at the start of the process, the Treasury Department said Thursday. Borrowers will have to give the Internal Revenue Service permission to provide their most recent tax returns, rather than submitting the returns themselves.

The changes become mandatory for loan modifications made starting June 1. The $75 billion program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years.

Phyllis Caldwell, chief of Treasury’s homeownership preservation office, defended the Obama administration’s initial decision to allow people to qualify based on verbal statements of income. “We needed to provide immediate relief to more homeowners faster,” she told reporters.

The change in policy came after officials concluded that mortgage companies such as GMAC Mortgage and Ocwen Financial Corp. were delivering better results. They had always required documents up front.

Under the new rules, participating mortgage companies must acknowledge receipt of a borrower’s application within 10 days and approve or deny the application within 30 days. After that, borrowers will still be required to make three months of trial payments before the modification becomes permanent.

While the changes should help, the lack of penalties for companies who don’t comply disappointed some experts. “There’s no teeth to that obligation,” said Andrew Jakabovics, associate director for housing at the Center for American Progress, a liberal think tank.

Many consumer groups, meanwhile, have been calling for more dramatic changes to the program. They want to help homeowners who have lost their jobs and those who owe the bank more than their homes are worth.

Treasury officials said they are studying ways to aid unemployed homeowners, but offered no details.

In an effort to reach more borrowers, Freddie Mac is teaming up with nonprofit groups who will contact financially troubled homeowners who haven’t responded to offers for help.

The McLean, Va.-based company said Thursday it is starting a national phone campaign to contact borrowers. In-person counseling will be available Chicago, Phoenix, San Bernardino, Calif. and Washington, D.C.

The idea behind the program is that many borrowers are more likely to work with a housing counselor than a mortgage company. Plus, in many cases borrowers are so distressed that “it becomes daunting for them to just take the fist step,” said Christina Diaz-Malone, Freddie Mac’s director of corporate relations and housing outreach.