Chicago ? At least eight states, including Illinois, California and Texas, have reached an $8.8 billion settlement of their lawsuits against Countrywide Financial, the biggest subprime mortgage lender.

Bank of America, which is settling the lawsuit, purchased Countrywide earlier this year as several states’ attorneys general were investigating allegations of fraud against the lending giant. Bank of America promised to work out new mortgages at interest rates as low as 2.5 percent and pay cash compensation to people who already lost their homes.

As many as 12 states may participate by the time an official announcement is made early today on a deal worked out last week.

Illinois, California, Iowa, Ohio, Texas, Arizona, Washington and Connecticut had agreed to the Countrywide settlement program by early Sunday evening. North Carolina, West Virginia, Indiana and Michigan were still in settlement talks, a Countrywide spokesman said.