Iowa Attorney General Tom Miller announced this morning at a news conference that Countrywide Financial Corp. has agreed to provide loan modifications for up to 397,000 borrowers nationwide, 1,100 of which will be directly offered to Iowans.

Miller said the agreement could result in more than $8 billion in permanent relief nationwide, with Iowa seeing a potential economic relief of $11 million. Currently, about one-fourth to one-half of all Countrywide subprime loans in Iowa are delinquent, depending on the type of loan.

“The mortgage industry’s failure to develop systematic approaches to prevent foreclosures has only spurred declines in property values and further increased expected losses on mortgage loan portfolios,” Miller said in a release.

The agreement was reached late Friday by several states with Bank of America Corp., which acquired Countrywide in July. Those states include Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas, Washington, Illinois and California.

California will be offered $3.5 billion in relief, whereas Illinois will receive $190 million in relief, the Associated Press reported.

As part of the agreement, eligible subprime borrowers will be able to modify the terms of their loans to make monthly payments more affordable, either by freezing or reducing interest rates, converting to fixed-term loans or refinancing the principal owed.

“Foreclosure is the enemy,” Miller said, as he urged other lenders to adopt this approach, insisting this is the action that is necessary to “stop the flood of foreclosures.”

“I strongly urge other servicers to undertake similar aggressive programs to prevent foreclosures,” he said. “This is the approach we need across this industry. … This is what we have been looking for.”

The new agreement is expected to take affect as early as Dec. 1, and Countrywide customers can call (800) 669-6607 to determine if they qualify for the loan modification program.