Facing a lawsuit over deceptive mortgage practices, Bank of America Corp. has agreed to pay more than $8 billion to modify hundreds of thousands of loans to keep people in Ohio and other states from losing their homes.

Bank of America, based in Charlotte, N.C., said Monday it will modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 customers of Countrywide Financial Corp., the mortgage lender it acquired last summer.

''More than 8,000 Ohioans will be offered mortgage loan modifications that will help thousands of Ohio families avoid foreclosure and stay in their homes,'' said Ohio Attorney General Nancy H. Rogers.

The attorney general offices in 11 states announced Monday that the bank was making changes.

Options include revising customers' payments so they don't exceed 34 percent of income, reducing interest rates and adjusting principal so that borrowers don't wind up actually losing equity under some payment plans.

Countrywide will not charge fees to modify the loans and will waive prepayment penalties.

Some borrowers might qualify to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home.

Countrywide is the same company that owned the mortgage on the Akron home of 90-year-old Addie Polk before it sold the loan to Fannie Mae, which foreclosed on the property. Polk on Thursday shot herself as sheriff's deputies arrived at the house to notify her of her eviction. By Friday afternoon, after Polk's story was thrust into the national spotlight, Fannie Mae officials said they were forgiving Polk's mortgage and allowing her to return to her home.

She still has an $11,380 home-equity loan through Countrywide.

Illinois and California sued Countrywide this year. Nine other states have joined the settlement, and other states could sign on, officials said.

In California alone, the settlement will offer $3.5 billion in relief. For Ohio, it would translate to $97 million.

''Countrywide's lending practices turned the American Dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford,'' California Attorney General Jerry Brown Jr. said Sunday.

Other states joining the settlement are Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.

Barbara Desoer, president of Bank of America's mortgage, home equity and insurance services, called the plan ''a comprehensive program that provides more solutions than ever before to assist troubled borrowers and put them back on the path to sustained home ownership.''

Illinois Attorney General Lisa Madigan said she hopes the settlement could serve as a model for steps that other lenders could take to make up for misleading mortgage practices. She stressed that the agreement involves no tax money but will help people keep their homes and keep money flowing to lenders

''This settlement will help homeowners stay in their homes, which ultimately helps investors and also helps communities,'' Madigan said.