Five of the nation's top banks reached a settlement agreement with federal and state attorneys general on February 9 for their role in reckless business practices that contributed to the collapse of the U.S. housing market.

The $25 billion agreement will help homeowners stuck paying unfair mortgages in a variety of ways. Roughly $10 billion will be dedicated to reducing the principal for homeowners who are behind on mortgage payments and owe more than the value of their house. Those who are not behind on payments can take advantage of $3 billion to help homeowners refinance loans. A further $7 billion will help homeowners in other ways, while the remaining $5 billion will be split
between the federal and state governments.

The big banks had been under growing pressure to settle due to mounting legal costs associated with both the lawsuit and their shoddy investment deals. Bank of America alone spent $1.76 billion in the second half of 2011 fighting the state and federal lawsuit and combating irate investors who demanded refunds on faulty mortgages, according to Bloomberg News.

VA home loans survived the mortgage collapse better than standard-market mortgages, a recent VA analysis found. VA-backed mortgages have the lowest foreclosure rate in the country.

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