$25 Billion Mortgage Settlement To Be Announced This Afternoon It's been a long slog, but government officials and representatives from major U.S. banks have reportedly come to terms on a settlement that would put an end to federal and state investigations into alleged foreclosure abuses by financial institutions. The White House will announce the official details early this afternoon, but several reports paint a picture of what the final deal will look like. The five major banks involved in the settlement: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial will pay roughly $25 billion in penalties, and relief to borrowers, states and the federal government. According to sources cited in the financial blog Naked Capitalism the breakdown of those funds is as follows: $20 billion in direct consumer relief, with $17 billion going to principal reduction, and $3 billion to help underwater borrowers refinance their mortgages at lower rates; $4.25 billion of cash will be distributed to states, with $1.5 billion going out as checks to borrowers who were victims of foreclosure abuses, and $2.75 distributed to state governments to help with foreclosure prevention efforts; and $750 million will be paid to the federal government to pay for similar efforts. Borrowers who were victims of foreclosure abuses must file claims to receive cash payments, which will range from $1,500 to $2,000 depending on how many claims are filed. Reports indicate that roughly 750,000 homeowners would be eligible to file claims. MORE: How "Shadow Inventory" Is Killing the Housing Market The deal should create much more certainty for the banks going forward, as the settlement would bar state attorneys general from pursuing further penalties against major banks. It is unclear whether a suit filed by New York State Attorney Generl Eric Schniederman concerning so-called "robosigning" violations will be withdrawn. The deal is also a win for states attorney general and the administration, who can now point to this settlement, the largest of its kind since the tobacco settlement of the 1990s, as concrete action taken to right the wrongs perpetrated by the mortgage industry leading up to and following the financial crisis. It is still uncertain what rights individuals and states have to pursue further damages, and whether mortgage investors, who bought securitized mortgages from the big five banks, will be forced to also write down their investments. Stay tuned, as we'll post more details as they emerge.