Wells Fargo is already contacting borrowers who might be eligible for a principal reduction as required under the $25 billion robo-signing settlement with state and federal law enforcement agencies.
"Starting on March 1, despite the fact that the settlement is still pending, we began communicating with borrowers who might qualify for consumer relief under the terms of the settlement," according to Wells Fargo Home Mortgage Servicing community relations manager Joe Ohayon.
Wells and four other mega-servicers, along with the state attorneys general, are waiting for a federal judge to approve the landmark settlement, which took 17 months to negotiate.
The settlement will result in an expanded use of principal forgiveness in the refinancing or modification of first and second mortgages, Ohayon told the House Oversight and Government Reform Committee Monday morning.
"Beginning April 1, mailings will go out to customers who are current on their payments, have little or no negative equity in their homes, but may qualify for the new refinance program," he testified at the field hearing in New York City.
Bank of America senior vice president Sheila Sellers told the committee members that BofA will "proactively reach out" to homeowners who could be eligible for a principal reduction that reduces their loan balance to the current value of the home.
"We will defer foreclosure sales for many of these borrowers until they can be considered for this relief," Sellers said.
JPMorgan Chase agreed to provide $3.5 billion of principal reductions on first and second mortgages for borrowers in default and "over $500 million in refinancing to underwater borrowers who are current on their loans," Eric Schuppenhauer told the oversight committee.
"We are committed to implementing the settlement provisions in a rapid manner and we will continue to develop and implement innovative programs to help borrowers," the Chase SVP for mortgage servicing and borrower assistance said.