In today’s Wall Street Journal report about the side deal that Bank of America made with Obama Aministration officials (related to the robo-signing settlement announced a few weeks ago) comes word of a surprisingly generous approach toward principal reductions for nearly a quarter of a million underwater homeowners.

Under the arrangement, part of the recent $25 billion settlement of alleged foreclosure abuses between government officials and five large lenders, Bank of America will make deeper and broader cuts in balances than other banks

The plan will offer qualifying borrowers a chance to cut their mortgage balances to their home’s current market value. Other banks are required under the national settlement to cut principal to no more than 120% of the home’s value.

Borrowers who qualify are expected to receive principal reductions averaging more than $100,000, a Bank of America spokesman said. The pact’s total value will depend on how many borrowers take up the offer.

Based on the 200,000+ homeowners the article cites as being eligible for this action, a little simple math puts the total principal writedowns by BofA at over $20 billion! Now that seems like an even more unbelievable number than the $100,000 per household.

Of course, per the report, this will allow BofA to avoid $850 million in fines and they’ll save a bundle in taxes by adjusting these mortgage balances down, many of which they’d end up taking back as foreclosures anyway.

I guess homeowners are finally getting their bailout too!