American homeowners can breathe (a small) sigh of relief. The U.S. announced a $25 billion deal Thursday with the nation's largest banks - after more than a year of bickering and about-faces - that would provide some help for people struggling to pay their mortgages.

The settlement comes after evidence emerged late in 2010 that banks robo-signed thousands of foreclosure documents without properly reviewing paperwork. The Obama administration hopes the pact will open a new avenue for housing relief because it will force the banks to write down mortgages at a time when roughly one in four borrowers owe more on their mortgage than their home is worth.

The settlement helps "turn the page" on "recklessness" and abusive practices by banks that led to the housing crisis, President Barack Obama told reporters in remarks at the White House after the deal was announced. The settlement has been billed as complementing other government programs designed to boost the housing market that has been a drag on the economic recovery, a key issue for Obama as he fights for re-election in November. "We have reached a landmark settlement with the nation's largest banks that will speed relief to the hardest hit homeowners,'' Obama said. He also urged Congress to take action on some other proposals aimed at aiding homeowners, including one to help underwater borrowers who are current on their payments refinance their mortgages.

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The Obama administration has estimated that up to 1 million homeowners could benefit from the deal through mortgage writedowns and other forms of relief. The New York Times said another 750,000 people who lost their homes through foreclosures between January 2008 through the end of last year will get a $2,000 check. The aid will be doled out over three years, the Times said.

The core group of banks involved in settlement talks are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial Inc.

Forty-nine states joined the settlement in advance of a Feb. 6 deadline, but several states continued negotiations to address concerns specific to their state. The deal was clinched after California and New York joined at the last minute. Oklahoma was the lone holdout and will get no funds.

Although the deal with 49 states is the largest joint federal-state settlement ever obtained, the amount is minuscule compared to the declines in home values and the banks still face a host of other mortgage-related lawsuits.

"The bottom line about this settlement, is it's okay, it's a step forward, it's a step in the right direction. But let's not kid ourselves, there's a hell of a lot more that needs to be done," said Ira Rheingold, executive director of the National Association of Consumer Advocates.

The deal does little to ease bank investor fears, industry analysts said.

"We believe any initial euphoria over the deal will quickly fade as investors realize the flood of additional mortgage-related litigation that the major banks face," said Guggenheim Partners analyst Jaret Seiberg in a note on Thursday.