Wells Fargo (WFC) will begin implementing the mortgage refinancing requirements under the state and federal foreclosure settlement in March.
Wells and the four other largest mortgage servicers, Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C) and Ally Financial (GJM), signed a $26 billion settlement Thursday over alleged foreclosure abuses that arose in 2010.
The states and federal prosecutors agreed to relieve Wells Fargo from any claims and allegations on servicing, modification and foreclosure practices, including some claims related to the origination of mortgages.
The San Francisco-based bank will provide $900 million in payment relief through refinances as part of the deal. The funds will available in March, the bank said.
Wells will also provide $3.4 billion in principal reduction and short sale programs that forgive deficienct balances.
It will also pay $1 billion to the states as part of the payments to borrowers in foreclosure between 2008 and 2011. Eligible borrowers could get as much as $2,000.
The bank said it accrued the expected impact of the foreclosure settlement as of Dec. 31.
It will have three years to complete the relief payments and modifications or face up to $83 million in fines from federal regulators.
“Today’s agreement represents a very important step toward restoring confidence in mortgage servicing and stability in the housing market,” said Mike Heid, president of Wells Fargo Home Mortgage. “Wells Fargo has actively participated in the discussions leading to this agreement, which builds on the significant refinance and customer relief efforts we already have undertaken.”