Relief to more than one million homeowners with mortgage trouble or have lost their homes to foreclosure!

According to RISMedia today after more than a year of negotiations, the nation’s biggest banks, states attorneys general and federal officials have announced the largest housing settlement ever—more than $26 billion—over foreclosure practices. The deal is expected to offer relief to more than one million U.S. homeowners who are having trouble paying their mortgages or have lost their homes to foreclosure.

The states and federal authorities have been in discussions for more than a year with banks over the “robo-signing” crisis—the practice of assigning bank employees to rapidly approve numerous foreclosures with only cursory glances at the glut of paperwork to determine if all the documents are in order.

The settlement is with five big banks: Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo & Co., and Ally Financial Inc., the company formerly known as GMAC.

Of the $26 billion, $17 billion must be spent toward direct relief to borrowers, with a big chunk of that—60%—going toward principal reductions, or the write-downs of mortgage debt, as well as other kinds of loan modifications or assistance.

In late developments related to the settlement, it was also announced Thursday that the government will resolve its claims against Bank of America, Countrywide Financial Corporation and certain Countrywide subsidiaries and affiliates for underwriting and origination mortgage fraud. As part of the settlement, Bank of America will pay $1 billion to resolve the wrongdoing uncovered during the office’s investigation.

Housing industry officials were quick to praise the settlement as a positive step, but cautioned that it will not resolve all the industry’s problems.

Under the terms of the settlement, $5 billion will go toward a reserve account for state and federal programs and to individual homeowners harmed by bank practices. Negotiators have said that about 750,000 people could receive checks for about $1,500 to $2,000.

About $3 billion will go toward helping borrowers who are current on their mortgages but have no equity in their homes to refinance into new, lower-cost loans. The program will be similar to an existing Obama administration program that seeks to help underwater homeowners.

The massive effort, more than a year in the making, is the most recent government attempt to boost the limping housing market and help people whose homes lost significant value in the housing crash.

California and New York are two key states that were crucial to the settlement. Negotiators with the office of California’s attorney general have spent much of the week in negotiations with major mortgage servicers. California’s assent was key because it increased the size of the settlement to $26 billion from $19 billion without the state.

In New York, the settlement has been complicated by state Attorney General Eric Schneiderman’s recent lawsuit against three of the banks in the discussions — Bank of America, Wells Fargo and Chase — alleging that their use of an electronic database has resulted in widespread deception and fraudulent foreclosure practices, according to a person familiar with the matter.

According to reports, there are nine other financial institutions with mortgage servicers that are in discussions with states and federal regulators, and if they are included, the final settlement could increase by billions of dollars. If these other servicers participate, the total settlement could rise to between $30 billion and $45 billion in housing relief, reports said.

The next step is for the settlement to be filed as a judgment in federal court within a couple weeks. The court will need to approve the judgment. After that, servicers will be obligated to write a check and deposit some funds into an escrow trust that will distribute cash to federal governments and states.

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