About 20,000 Missourians who lost their homes to foreclosure could be eligible for checks of roughly $2,000 under a nationwide settlement between five giant banks and attorneys general for 49 states, including Missouri and Illinois.

Thousands of others in danger of foreclosure would be eligible to have their mortgage debt reduced, under the deal announced Thursday. Others whose homes are worth less than their mortgage would be allowed to refinance at lower rates.

Missouri and Illinois will share in a $25 billion pot provided by the banks to settle allegations that they engaged in abusive foreclosure tactics. Those include so-called "robo-signing," in which employees faked signatures on foreclosure papers or swore to the accuracy of papers they never read.

Under the deal, the states won't pursue civil charges related to these types of abuses. However, the states can still file criminal charges, and homeowners can still sue lenders on their own.

It's the biggest settlement involving a single industry since a 1998 multistate tobacco deal.

The five banks are Ally Financial, Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo.

The deal requires the big banks to reduce loans for about 1 million households at risk of foreclosure across the nation. The lenders also will send checks of up to $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.

"There were many small wrongs that were done here," said U.S. Housing and Urban Development Secretary Shaun Donovan. "This does not resolve everything. We will be aggressive about going after claims elsewhere."

The $25 billion program will "help around the edges" of the U.S. housing market but won't have a major impact, said Patrick Newport, economist at IHS Global Insight. He noted that U.S. homeowners owe an estimated $700 billion more than their homes are worth. The deal puts only about $13 billion toward refinancing or reducing debt for such "underwater" homeowners.

The national deal included every state except Oklahoma, which struck a separate deal with the five banks.

To be eligible, Missouri homeowners must have been foreclosed on by one of the five named banks, or their current mortgages must be serviced by one of them, according to Missouri Attorney General Chris Koster. Mortgages owned by government-run mortgage giants Fannie Mae and Freddie Mac are not covered by the deal.

The deal would provide no help for about a third of homeowners who show up at Catholic Charities in St. Louis seeking help in keeping their homes. Their mortgages are with servicers not covered by the deal, said Karen Wallensak, director of Catholic Charities Community Services, which provides free foreclosure counseling.

"Their loans are serviced by unregulated mortgage companies, like Litton and Beneficial," she said. "Typically those loans are the most egregious and difficult to resolve because those companies are basically unmotivated."

But Wallensak expects many of her other clients to benefit.

"Part of me feels like we're waking up from a four-year nightmare," she said. "There is a sense for me of justice and to some degree vindication."

Koster said the attorneys general tried to negotiate with all major mortgage servicers but found the process unwieldy. He said they will use Thursday's settlement as a "road map" as they begin bargaining with the next 10 largest mortgage servicers.

Missouri would receive more than $195 million, according to Koster. He and Gov. Jay Nixon have proposed diverting $40 million of that toward funding state universities while using the rest to aid homeowners.

Illinois Attorney General Lisa Madigan said Illinois would receive $1 billion. The amounts were decided by a formula accounting for population and the severity of the foreclosure situation in each state, Koster said.

Under the deal, people who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2011, will be eligible for checks of roughly $2,000. Koster said about 20,000 Missourians fit in that category, and they will share $31 million. No figure for Illinois was available.

Many Catholic Charities clients who lost their homes are "far down in the hole" with other kinds of debt, and $2,000 checks will go far to help, Wallensak said.

Borrowers whose homes are worth less than they owe, and who are current on their mortgage payments, will be able to refinance at today's low rates. The Missouri settlement puts $38 million toward refinancing.

Borrowers who are behind on payments, and who owe more than their homes are worth, can have their debt reduced and receive other assistance. The Missouri deal allocates $86.5 million to that program. No figures were available for Illinois.

Homeowners who want to refinance under the deal will have to apply through the five banks.

That raises a red flag with Clayton lawyer Greg White, who represents homeowners in foreclosure. He noted that the banks' system for modifying mortgages has been a mess of lost paperwork and delays.

"I think they're going to drag their feet for three or four more years until people forget about it," he said.

The program will run for three years. Koster says the banks must provide 75 percent of the relief within two years, and banks are rewarded for relief they provide in the first 12 months. The banks will be fined $1.40 for every dollar they fail to put toward the agreement, Koster said.

The agreement names Joseph A. Smith Jr., North Carolina commissioner of banks, to enforce the agreement. He can impose fines of $1 million per violation and up to $5 million for certain repeat violations.

The deal also requires the banks to meet new standards for dealing with delinquent homeowners. Foreclosure must be a last resort, with other options considered first, according to the U.S. Justice Department, which helped negotiate the deal.

Banks won't be able to foreclose while the homeowner is being considered for a loan modification. The deal sets timelines for reviewing loan modification applications and gives homeowners the right to appeal denials. Servicers must maintain adequate staff to handle calls.

Homeowners will be able to review mortgage paperwork before the foreclosure process starts.

Koster said he insisted that the deal not rule out criminal charges. The Missouri attorney general last week filed criminal forgery charges against DOCX, a Florida document processor, and its former president, Lorraine Brown. They were charged with filing robo-signed real estate papers in Boone County.

Robo-signing was a widespread problem, Koster said.

"Kids were getting $10 an hour and signing as bank vice presidents," he said at a St. Louis press conference.

Attorneys general from across the nation have been investigating the mortgage business, and Koster said his office has been assigned the criminal part of the effort.

Foreclosures have been less of a problem in St. Louis than in most of the nation. As of October, 1.75 percent of homes in the metro area were in foreclosure, compared with 7.75 percent nationally, according to the real estate analysis firm CoreLogic.

The Associated Press contributed to this report.