Almost 400,000 Countrywide mortgage holders will get help

— -- Monday's deal settles claims brought by attorneys general in 11 states that accused Countrywide — acquired in July by BofA — of misrepresenting loan terms, loan payment increases and borrowers' ability to afford loans.

Bank of America says it will restructure loans for Countrywide customers holding subprime mortgages and option adjustable-rate loans that permit borrowers to pay only a small portion of interest and principal owed each month. Some might wind up in new fixed-rate loans; others might not.

But the Bank of America deal represents only a fraction of the future defaults and foreclosures facing homeowners. There were more than 2.2 million foreclosure filings in the USA in 2007.

"There could be a couple million more (foreclosures to come), so it begins to put a price tag on the problem and how expensive it is," says economist Joel Naroff at Naroff Economic Advisors.

Pat Lashinsky, CEO of ZipRealty, says as many as 6 million homes will have gone through a short-sale or foreclosure before this housing slump is finished.

Expect more states to file claims against predatory lenders, predicts Roger Cominsky of Buffalo, a lawyer at Hiscock & Barclay who specializes in financial institutions and lending issues.

Under the terms of the agreement with Bank of America, eligible homeowners must occupy the home as their primary residence. Their mortgages must be seriously delinquent — or likely to become so. Loans must have been serviced by Countrywide and originated prior to Dec. 31, 2007. Modifications will include lower interest rates and principal reductions.

How borrowers will be helped:

•First-year payments of principal, interest, taxes and insurance will be restructured to equal 34% of borrower's income.