BofA expands Countrywide loan mods

Principal reductions to be offered to 45K borrowers

Bank of America will offer "earned principal forgiveness" to about 45,000 severely underwater homeowners who purchased homes with subprime and adjustable-rate mortgages offered by Countywide Financial Corp. and its subsidiaries.

After acquiring Countrywide in 2008, Bank of America launched an $8.4 billion loan modification program to settle charges by state attorneys general that Countrywide engaged in unfair and deceptive lending practices during the housing boom (see story).