Hawaii will receive an estimated $71 million as part of a $25 billion joint federal-state settlement with the nation’s five largest mortgage servicers over foreclosure abuses and fraud, state Attorney General David M. Louie said Thursday.

Louie said the money will help not only the borrowers who will get mortgage relief, but the overall housing market in Hawaii.

"The fact that we can get refinancing going, that we can get reductions going, that we can put an end (to) or at least slow down and reduce in large part the number of new foreclosures that are happening, that helps the general housing market," he said at a news conference.

About $50 million will be available to Hawaii borrowers in the form of loan modifications, including principal reduction; $9.3 million will allow borrowers to refinance their loans; $3.2 million will be available for one-time direct payments of up to $2,000 to borrowers who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2011; and $8.2 million will go into a trust account administered by the attorney general to provide benefit programs to island homeowners including credit counseling, mediation and public education.

The banks involved in the agreement are Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. (Ally is the parent of GMAC Mortgage).

Forty-nine states and the District of Columbia are part of the agreement. Oklahoma struck a separate deal with the five banks. Government officials are still negotiating with 14 other lenders to join.

The bulk of the money will go to California and Florida, two of the states hardest hit by the housing crisis and the ones with the most underwater homeowners. The two states stand to receive roughly 75 percent of the settlement funds.

Of the five major lenders, Bank of America will pay the most to borrowers — nearly $8.6 billion. Wells Fargo will pay about $4.3 billion; JPMorgan Chase, roughly $4.2 billion; Citigroup, about $1.8 billion; and Ally Financial, $200 million. The banks will also pay state and federal governments about $5.5 billion.

The settlement ends a painful chapter of the financial crisis, when home values sank and millions edged toward foreclosure. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures — a practice known as robo-signing.

"This agreement is a very good deal for Hawaii’s homeowners. It provides real relief and real money to help struggling homeowners in our state," Louie said in a news release. "Importantly, this puts a stop to the bad practices of many banks, and puts into place a comprehensive set of reforms for how banks must treat homeowners with mortgages."

The state Department of Commerce and Consumer Affairs is putting together information to help affected borrowers take advantage of the settlement programs. People can also contact the companies that service their mortgages.

The state Senate Commerce and Consumer Affairs Committee will conduct an informational briefing on the settlement at 10 a.m. Tuesday in Conference Room 229 at the state Capitol. If response is overwhelming, committee Chairwoman Rosa­lyn Baker said the hearing may be moved to the auditorium.

The Rev. Bob Nakata, a former state legislator who is now a board member of the advocacy group Faith Action for Community Equity, said in a statement, "Attorneys general across the country were able to get all the big banks to agree to a common standard for servicing the troubled loans — and this is a game-changer for families trying to navigate the maze of loan modification rules and policies."

The deal requires the banks to reduce loans for about 1 million households that are at risk of foreclosure. The lenders will also send $2,000 each to about 750,000 Americans who were improperly foreclosed upon from 2008 through 2011.

The banks will have three years to fulfill terms of the deal.

The states have agreed not to pursue civil charges over the abuses covered by the settlement. Homeowners can still sue lenders on their own, and federal and state authorities can still pursue criminal charges.

The deal, reached after 16 months of contentious negotiations, is subject to approval by a federal judge. It’s the biggest settlement involving a single industry since the $206 billion multistate tobacco deal in 1998.

While government officials hailed the settlement Thursday as long-overdue relief for victims of foreclosure abuses, consumer advocates countered that far too few people will benefit, The Associated Press reported.

The deal will reduce loans for only a fraction of those Americans who owe more than their homes are worth.

It’s unclear how much the deal will help struggling homeowners keep their homes or benefit those who have already lost theirs.

About 11 million households are underwater, meaning they owe more than their homes are worth. The settlement would help 1 million of them.

"The total number of dollars is still small compared to the value of the mortgages that are underwater," said Richard Green, director of the University of Southern California’s Lusk Center for Real Estate.

The Associated Press contributed to this report.

Hawaii News Now video: National mortgage settlement to impact Hawaii homeowners