Strapped borrowers would have to provide mortgage servicers some basic financial information before having their mortgage debts reduced by a bankruptcy judge, under an amendment to so-called "cram-down" legislation offered by its chief U.S. House sponsor.

The amendment could dampen slightly the impact of the legislation, by ensuring that fewer people qualify to have the principal balance of their mortgage loan reduced by a judge - known as a cram down.

Proponents say the bill will act like a stick, spurring mortgage servicers to modify more loans voluntarily, particularly with the newly announced government incentives for servicers and borrowers in place. The financial industry contends that it will raise mortgage rates for all borrowers. The legislation is set for a House vote as soon as Thursday.

The amendment, offered by Judiciary Chairman John Conyers, D-Mich., is likely to be added to the bill at a meeting of the House Rules Committee Wednesday.

Under the change, borrowers would have to supply servicers a written statement of current income and expenses at least 15 days prior to filing for bankruptcy, according to a text of the amendment posted on the Rules Committee Web site.

Currently, the legislation would only require borrowers to prove they contacted their mortgage servicer about receiving a voluntary loan modification before seeking a court-ordered modification. They would not have to provide any information, in writing or over the phone.

The Obama administration, which supports legislation to allow for court-ordered mortgage modifications, proposed that borrowers prove they cooperated with requests for basic information from mortgage servicers before filing for bankruptcy.

It also said cram downs should be limited to mortgages no bigger than those that Fannie Mae (FNM) and Freddie Mac (FRE) buy or guarantee. No such restrictions are included in the House bill. -By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com