The deal applies to so-called pay option-adjustable rate mortgages made by Wachovia Bank and World Savings Banks to allow borrowers to make payments at various levels. Wachovia Bank bought World Savings in 2006. Wells Fargo then purchased Wachovia in 2008.
Eight other states, including Arizona. Nevada, Colorado and Washington, have reached similar settlements with Wells Fargo, according to Brown's office.
California borrowers eligible for loan changes will be notified by Wells Fargo within two months.
Borrowers whose homes were foreclosured upon will be contacted during the next six months.
The Associated Press Contributed to this report.