* Bank's portion of $25 bln settlement is $5.3 billion
* Has already set aside reserves for loan modifications
Feb 28 (Reuters) - Wells Fargo & Co said in a filing Tuesday that the national mortgage settlement announced this month will cost it $720 million in lost interest income over a period of years.
The lost interest payments stem from a refinancing program for borrowers who owe more than their homes are worth.
Wells Fargo, the largest U.S. mortgage servicer, said it expects to refinance about 20,000 borrowers with an unpaid principal balance of about $4 billion to meet its commitment to the program.
The bank's portion of the $25 billion pact totals $5.3 billion, counting $3.4 billion in loan modifications, $900 million in total relief for the refinancing program and $1 billion for foreclosure-related problems.
The bank said it had already set aside reserves for the loan modifications and foreclosure assistance. Wells Fargo earned $49.4 billion from interest income in 2011.