U.S. President Barack Obama has welcomed a $25 billion settlement between mortgage lenders and U.S. states, saying it "will begin to turn the page on an era of recklessness that has left so much damage in its wake."

The agreement is the largest industry fine since a multi-state deal with the tobacco industry in 1998. At a news conference, President Obama, who had pushed hard for the deal, said: "We have reached a landmark settlement with the nation's largest banks that will speed relief to the hardest-hit homeowners."

He urged Congress to take action on other proposals aimed at aiding homeowners, including one to help borrowers who owe more than their homes are worth to refinance their mortgages.

Federal and bank officials have been in negotiations over the deal for over a year. Negotiations were continuing up until late Tuesday night. Announcing the settlement, attorney-general Eric Holder said: "This agreement reflects our commitment – at both the federal and state levels – to ensure justice, and to recover losses, for victims of reckless and abusive mortgage practices."

The agreement covers five banks: Ally Financial, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo. The five account for 55% of all outstanding home loans, according to Inside Mortgage Finance. It does not cover Fannie Mae and Freddie Mac, the government-sponsored lender that account for most of the rest of the market.