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. (Read more foreclosures stories.)