Bank of America Corp completed 20,666 mortgage modifications in March under a U.S. government-backed program, up 61 percent from February, the bank said on Friday.

The government's Home Affordable Modification Program provides incentives for banks to modify mortgages if customers are unable to meet the original payment terms. The program is a key component of government efforts to reduce foreclosures.

Homeowners are required to go through a trial modification period before a HAMP modification is made permanent.

Bank of America, the largest U.S. bank by assets, said 22,303 mortgages are in the final stages of being permanently modified.

The bank has 240,000 mortgages in the first stage of the HAMP program, which includes a temporary modification.

The bank said it has modified 760,000 mortgages through government and private programs since January 2008.

(Reporting by Joe Rauch; editing by John Wallace)