• A home for sale in Yardley, Pa.

The deal between the federal government and 49 states and Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial.

(Oklahoma, which negotiated a separate deal with the banks, is not participating in the agreement)

Banks will pay roughly $20 billion to help borrowers avoid foreclosure. Most of that will go toward reducing loans for about 1 million of the 11 million U.S. households that owe more on their mortgages than their homes are worth.

The banks will also pay $5 billion in cash to the federal and state governments. About a third of that money will go into a fund to be used for sending $2,000 checks to about 750,000 Americans who were improperly foreclosed upon from 2008 through 2011.

Bank of America has the largest financial obligation under the settlement, at $11.8 billion.

The banks will have to complete 75% of their loan-relief requirements within two years and 100% within three years.

The banks didn’t admit wrongdoing as part of the settlement. Federal and state law enforcement authorities could still pursue criminal action against them, the government says. In addition, individuals who believe they were wronged can still sue the banks in civil lawsuits.

The settlement, reached after nearly a year and a half of contentious negotiations, requires the approval of a federal judge in Washington, D.C. It is the largest settlement involving a single industry since the $206 billion multistate tobacco deal in 1998.

But consumer advocates have said far too few people will benefit. The deal applies only to privately held mortgages and not to those owned by mortgage giants Fannie Mae and Freddie Mac. Banks own about half of all U.S. mortgages, or about 30 million loans; Fannie and Freddie own the other half.

The banks will be required to make foreclosure their last resort. They won’t be allowed to foreclose on a homeowner who is being considered for a loan modification.

The new standards are aimed at preventing recent abuses by banks such as lost paperwork and so-called robo-signing — the practice of employees signing papers they hadn’t read or using fake signatures to speed foreclosures.

Forty-nine states and the District of Columbia will receive more than $2.5 billion under a settlement among the states, the federal government and five banks1 over abusive foreclosure practices. The rest of the $25 billion will be paid to borrowers and to the federal government. Oklahoma is not included because it reached a separate agreement with the banks. Amounts, in millions:
Alaska
$3.30
Kentucky
$19.2
New York
$107.6
Alabama
$25.3
Louisiana
$21.7
Ohio
$92.80
Arkansas
$12.80
Massachusetts
$44.5
Oregon
$29.3
Arizona
$97.80
Maryland
$59.7
Pennsylvania
$66.5
California
$410.60
Maine
$6.90
Rhode Island
$8.5
Colorado
$50.20
Michigan
$97.2
S. Carolina
$31.3
Connecticut
$26.1
Minnesota
$41.5
South Dakota
$2.9
D.C.
$4.40
Missouri
$39.6
Tennessee
$41.2
Delaware
$7.90
Mississippi
$13.6
Texas
$134.60
Florida
$334.10
Montana
$4.9
Utah
$21.90
Georgia
$99.40
North Carolina
$60.9
Virginia
$66.5
Hawaii
$7.90
North Dakota
$1.9
Vermont
$2.6
Iowa
$14.70
Nebraska
$8.4
Washington
$54.2
Idaho
$13.30
N. Hampshire
$9.6
Wisconsin
$30.2
Illinois
$105.80
New Jersey
$72.1
West Virginia
$5.7
Indiana
$43.80
New Mexico
$11.2
Wyoming
$2.6
Kansas
$13.80
Nevada
$57.4
1 = Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo
Sources: Court filings, nationalmortgagesettlement.com