A recent settlement between federal and state governments and five of the biggest banks in the country over faulty mortgage deals may carry some unfortunate - but temporary - consequences, according to a Bloomberg report.

With big banks distracted by the government's investigation into their business practices during much of last year, the rate of home foreclosures fell by 46 percent between October 2010 and December 2011. With the lawsuit settled, banks can return to their day-to-day business, and that means home seizures. Housing market analysts at RealtyTrac expect roughly 1 million foreclosures during 2012, up 25 percent from last year, according to Bloomberg.

The surge in home seizures will be short-lived, however. And while the foreclosures will likely drive home prices down in the currently fragile housing market, some principal reductions through the terms of the settlement, and through unrelated government initiatives, could strengthen the housing market in the long-term, Bloomberg reports.

Veterans who take out VA home loans face a lower rate of foreclosure than non-veteran mortgage holders, according to recent data from VA. During 2011, 72,391 veterans who defaulted on their mortgage loans were able to keep their homes through the VA benefit related to troubled mortgage assistance.

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