Bank of America announced Tuesday that it has begun contacting about 200,000 customers who have fallen behind on home loans and who owe more than their current home values to notify them that they may qualify to have their loan balances reduced as much as $100,000. However, only loans owned by Bank of America will qualify. Those owned or backed by government-controlled mortgage buyers Fannie Mae and Freddie Mac, or backed by the Federal Housing Administration, are ineligible.

The offers represent the second phase of the loan forgiveness program at Bank of America.

The $25 billion, 49-state settlement requires B of A, WellsFargo&Co., JPMorgan Chase & Co., Citigroup Inc. and AllyFinancial Inc. to reduce principal for some borrowers.

Bank of America is by far offering the most, about $11.8 billion in write-downs that it said would reduce the typical borrower payment 30%.

Most of the offers would go to states where Countrywide Financial Corp. had done the most business,California andFlorida.