(Corrects to show House to take up housing bill on Thursday in paragraph 9)

* U.S. launches $75 billion mortgage modification plan

* Borrowers must show hardship to qualify for program

* Data show 1 in 5 homeowners owe more than house worth

By David Lawder and Lynn Adler

WASHINGTON/NEW YORK, March 4 (Reuters) - The Obama administration on Wednesday launched a $75 billion foreclosure relief plan, as new data showed one in five U.S. homeowners with mortgages owe more than their house is worth.

The mortgage plan, part of a $275 billion housing stimulus program announced last month, enables struggling homeowners to modify loans even if they are "under water."

Homeowners with mortgages on about 8.3 million properties were under water at the end of 2008 and the distress is likely to grow as home values shrink, according to First American CoreLogic.

Being under water, or having negative equity, has previously ruled out refinancing. This new government step aims to reduce payments and prevent looming foreclosures for struggling borrowers and allow standard refinancings for stronger borrowers whose homes values have eroded.