Wells Fargo & Co agreed Wednesday to pay eight U.S. states $24 million to help struggling homeowners after allegations of deceptive marketing practices at its home loan unit.

The $24 million will be paid to the states immediately for the states to use how they see fit but generally focused on borrower outreach, relocation assistance and the like," Franklin Codel, chief financial officer at Wells Fargo Home Mortgage, told Reuters in an interview.

Wells Fargo also said it would alter its foreclosure prevention practices for slightly more than 8,000 struggling borrowers who could potentially end up with benefits valued at more than $700 million.

This agreement is a major step forward in assisting struggling homeowners to stay in their homes," said Arizona Attorney General Terry Goddard, who spearheaded the effort. Goddard, a Democrat, is running against incumbent Republican Jan Brewer for governor.

Arizona and seven other states alleged that some units of Wells Fargo Home Mortgage used deceptive marketing practices for risky loans popular during the housing boom that let borrowers choose a payment.

The plans in question, known as pick-a-payment or pay-option adjustable rate mortgages, were initially made by Wachovia and Golden West, two lenders that Wells later acquired.

Wells agreed to work with borrowers from Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington state to restructure their loans between Dec. 1, 2010. and June 30, 2013.

The restructurings could include a combination of interest rate reductions, term extensions and principal forgiveness. Wells agreed to terms that could bring more than $400 million in principal reductions, Goddard said.

Codel said Wells Fargo is reaching out to the other 42" U.S. states and is looking forward to discussions with them.

Asked about the wider issue of a growing probe into banks' foreclosure practices, Codel said he remains confident that Wells did not cut corners to speed up the foreclosure process.

We have reviewed our practices, our controls, our processes and feel confident that the paperwork is being properly produced," said Codel. We audit our results regularly and stand by our foreclosure filings."