BofA to Modify Troubled Mortgages

Updated from 2:37 a.m.

Bank of America (BAC Quote) on Monday said it has created a program that will modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for close to 400,000 Countrywide Financial customers.

The program was developed with state attorneys general and is designed to "achieve affordable and sustainable mortgage payments" for borrowers who financed their homes with subprime loans or pay-option adjustable rate mortgages serviced by Countrywide and originated prior to Dec. 31, 2007, Bank of America said. Bank of America acquired Countrywide on July 1.

"This is going to provide a tremendous amount of relief," said Illinois Attorney General Lisa Madigan, the Associated Press reports. ...