UPDATE 1-BofA could get $2.66 bln for mortgage mods-Treasury

(Adds details on Treasury investments)

WASHINGTON, April 21 (Reuters) - The U.S. Treasury Department said on Tuesday that Bank of America (BAC.N) could receive up to $2.66 billion in incentives for modifying mortgages under an Obama administration housing rescue program.

The amount, disclosed in a transaction report by the Treasury's Troubled Asset Relief Program, includes $798.9 million for Bank of America N.A. and $1.864 billion for Countrywide Home Loans Servicing LP, which Bank of America acquired last year.

The Treasury has so far allocated a total of $13.23 billion to nine mortgage-servicing firms from a kitty of $50 billion earmarked for mortgage modification incentives.

Under the program, the servicers can receive government payments for each successfully modified loan that keeps struggling borrowers in their homes.

The report also showed that American International Group (AIG.N) received $29.835 billion in new government funds on Friday in exchange for preferred stock. This latest injection, agreed in early March, was originally intended to be $30 billion.

But the Treasury, which is trying to claw back $165 million in controversial bonuses paid to AIG Financial Products employees on March 15, deducted the bonus amount from the investment.

The Treasury also said it invested $40.9 million in preferred stock in six small U.S. banks, bringing its net investments to $198.42 billion in 553 institutions under the Capital Purchase Program.