In New York State , more than 46,000 borrowers will receive some form of benefit, with an estimated 21,000 expected to see what they owe reduced through a principal reduction, according to estimates by the Department of Housing and Urban Development . 
 
 The five mortgage servicers in the settlement — Bank of America , JPMorgan Chase , Wells Fargo , Citigroup and Ally Financial — have largely set aside reserves for the expected cost of the accord and investors are likely to cheer its announcement because it removes one more legal worry for the industry, analysts said. 
 
 “I wouldn’t say it’s a panacea for the housing industry but it is good for the banks to get this behind them,” said Jason Goldberg, an analyst with Barclays . 
 
 As more and more states signed on this week, the negotiations with the banks became especially intense, said one participant, who wasn’t authorized to speak publicly. Two bank officials, Frank Bisignano of JPMorgan Chase and Mike Heid of Wells Fargo, played a critical role in the talks with Shaun Donovan , the secretary of Housing and Urban Development, and Thomas J. Perrelli, the associate attorney general at the Justice Department. Bank of America, which will make the largest payout as the nation’s biggest mortgage servicer, moved more cautiously, the participant said. 
 
 The settlement money will be doled out under a complicated formula that gives banks varying degrees of credit for different kinds of help. As a result, banks are incentivized to help harder-hit borrowers with homes worth far less than what they owe. 
 
 While the $26 billion figure is the one being cited in the negotiations, federal officials said they hope the eventual value for homeowners reaches up to $39 billion. However, mortgages owned by the government’s housing finance agencies, Fannie Mae and Freddie Mac , will not be covered under the deal, excluding about half the nation’s mortgages. 
 
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 About one in five Americans with mortgages are underwater, which means they owe more than their home is worth. Collectively, their negative equity is almost $700 billion. On average, these homeowners are underwater by $50,000 each. 
 
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 A recent estimate from the settlement negotiations put the average aid for homeowners at $20,000. 
 
 “I just don’t think it’s going to be a life-changing event for borrowers,” said Gus Altuzarra, whose company, the Vertical Capital Markets Group, buys loans from banks at a discount. 
 
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 Several billion dollars would cover the direct cash payments to foreclosure victims and provide money for states’ attorneys general to services like mortgage counseling and future investigations into mortgage fraud. 
 
 Though many economists identify the moribund housing market as the greatest drag on the recovery, it is not clear how much the settlement will help. 
 
 Christopher J. Mayer, a housing expert at Columbia Business School, said the accord could give banks more certainty that they can clear their large backloads of seized homes, restoring the flow of those homes into the market. 
 
 “It may be good for individual homeowners, but if you don’t do something to help the foreclosure process, it’s not going to help the housing market,” he said. 
 
 Mark Zandi, the chief economist for Moodys Analytics, said that while the settlement looked small compared with the scope of the problem, it was not necessary to erase all, or even most, of the nation’s negative equity to turn the market around. 
 
 About a third of houses on the market now are distressed, or have been through foreclosure, he said, and reducing that percentage by just a small amount could be enough to put a floor under housing prices. 
 
 More than the dollar figures, the settlement had been held up amid concern by New York’s attorney general, Eric T. Schneiderman , that it provided too broad of a release for banks for past misdeeds, making future investigations much more difficult. 
 
 Mr. Schneiderman was able to win significant concessions from the banks in recent days. 
 
 In the agreement’s expected final form, the releases are mostly limited to the foreclosure process, like the eviction of homeowners after only a cursory examination of documents, a practice known as robo-signing. 
 
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 The prosecutors and regulators still have the right to investigate other elements that contributed to the housing bubble, like the assembly of risky mortgages into securities that were sold to investors and later soured, as well as insurance and tax fraud. 
 
 Officials will also be able to pursue any allegations of criminal wrongdoing. In addition, a lawsuit Mr. Schneiderman filed Friday against MERS , an electronic mortgage registry responsible for much of the robo-signing that has marred the foreclosure process nationwide, and three banks, Bank of America, JPMorgan Chase and Wells Fargo, will also go forward. 
 
 Along with how broad the releases would be, California’s attorney general, Kamala Harris, also pushed for her state to be able to use the state’s False Claims Act. That would enable state officials and huge pension funds like Calpers to collect sizable monetary damages from the banks if officials could prove mortgages were improperly packaged into securities that later dropped in value. ||||| The nation’s five largest banks and a consortium of state attorneys general are closing in on finalizing a settlement of at least $25 billion for the roles the banks played in the mortgage meltdown, POLITICO has confirmed. 
 
 If completed, the deal would be the largest of its kind in history, rivaling the 1998 settlement states reached with the tobacco industry, and the largest civil action ever against the housing industry. The agreement would cap a year-long series of negotiations designed to hold banks accountable for falsifying documents related to home foreclosures in several states. 
 
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 Under the proposed terms, mortgage debt would be cut for about 1 million homeowners, while another 300,000 would have their loans re-financed at lower interest rates. Roughly 750,000 who were foreclosed on would each be compensated for their loss with $2,000. 
 
 More than two million Americans could benefit from the settlement, according to a source familiar with the negotiations. 
 
 But it won’t exempt the banks from all liabilities: Government officials would still be able to investigate potential crimes connected to the housing bubble, in addition to investigating mortgage industry practices such as bundling sub-prime mortgages into bonds, the source said. 
 
 The bulk of the settlement would be set aside for struggling homeowners, including loan modifications, refinancing and principal reduction — rewriting the mortgage to reflect the current value of the home. Another portion of the money would fund a reserve account for state and federal programs and for payments to homeowners whose mortgages were improperly processed. 
 
 The consortium effort between the Justice Department and the 50 state attorneys general, led by Iowa Attorney General Tom Miller, has been looking to strike the deal with Bank of America, Citigroup, JPMorgan Chase, Ally Financial and Wells Fargo. 
 
 A deal had been widely anticipated at several points, but hit snags as several attorneys general — including Eric Schneiderman of New York, Kamala Harris of California and Beau Biden of Delaware, son of Vice President Joe Biden — raised concerns that the proposal was too small and would grant the banks immunity from possible prosecution for fraud. On Monday night, the Huffington Post, citing sources, reported that Harris and Biden agreed to join the settlement. 
 
 Others expressing reservations had included the attorneys general of Minnesota, Nevada, Massachusetts and Kentucky.
– America's five biggest banks have hammered out a $26 billion settlement for their role in causing the mortgage meltdown, reports the Wall Street Journal. The deal—the biggest of its kind since 1998's $206 billion settlement with the tobacco industry—was hammered out during almost a year of negotiations between the banks and all 50 state attorneys general, reports the New York Times. The money will go to some 2 million homeowners affected by the crisis. Under the settlement, some 750,000 people who lost their homes to foreclosure will receive payouts of around $2,000 each, a million people will have their mortgage debt cut, and 300,000 will be able to refinance their homes at lower rates, reports Politico. Analysts say that the deal, while small compared to the $700 billion in negative equity American homeowners are struggling with, could do a lot to turn the housing market around. Banks sought immunity from prosecution in return for the settlement, but officials will still be able to investigate any criminal wrongdoing in mortgage robo-signing and other abuses.