CHARLESTON, W.Va. -- West Virginian homeowners will get $33 million in immediate relief, direct payments and benefits as part of the $25 billion landmark settlement with five of the nation's largest banks because of nationwide foreclosure abuses, Attorney General Darrell McGraw announced on Thursday.

The state will receive $33.8 million total in the largest government-industry settlement since the deal with tobacco companies in 1998.

The settlement is some relief meant to benefit people who have been victims of foreclosure and mortgage servicing fraud by Bank of America/Countrywide, Citibank, JPMorgan Chase, Wells Fargo and GMAC/Ally Financial, McGraw said.

The relief will help many homeowners avoid foreclosures and stay in their homes with affordable payments by offering them principal reduction, free refinancing, direct payments if their homes have already been foreclosed on, and enhanced safeguards for military personnel.

The banks also must begin major improvements in their mortgage servicing practices, which includes setting up new verification standards and restrictions on questionable fees.

Of the $33 million West Virginian homeowners will receive:

* $18.4 million in loan modifications and benefits to homeowners currently in default or foreclosure.

* $5.7 million in free refinancing for current homeowners whose mortgages are "underwater."

* $6 million for foreclosure and mortgage assistance and prevention programs.

"This is a historical settlement. It means the first time ever that banks have to treat homebuyers with dignity," said Assistant Attorney General Heather Connolly. "It's another form of relief even if you've been foreclosed on. Any borrower who believes they've been financially injured qualifies."

The number of West Virginians who can benefit from the millions of dollars in assistance depends, Connolly said.

For borrowers with loan modifications and refinance options, they may be contacted directly by one of the five banks.

For those people who lost their home to foreclosure, an administrator from the Attorney General's office will contact those who are eligible, she said.

Borrowers can also contact their bank if they think they are eligible. Each bank and mortgage provider in the settlement has a specific application process, another reason it is still unknown exactly who will receive benefits. West Virginians can call the Consumer Hotline of the state Attorney General's office, 1-800-368-8808 or 304-558-8986.

Homeowners who believe they may be eligible for relief under the new settlement can also visit www.wvago.gov or www.nationalforeclosuresettlement.com. Individuals can also hire a lawyer, go to Legal Aid or join a class action lawsuit -- which are options that were available to them before the settlement, Connolly said.

"We are ready to help you. We have our team in place ... to make sure you're not ignored," Connolly said.

Banks have three years to complete the refinancing while individuals who do receive payments will see checks within the next six months. Banks that do not live up to the settlement will be penalized, McGraw said.

For Inwood residents Charles and Mary Kerns, Thursday's announcement came as a relief. Three years ago, Charles' loan modification switched to Bank of America, and the bank has tried to foreclose on the couple three times since.

"They pull the rug out from beneath you," Charles said. "It may be a house to [the bank], but this is our home. I can't take much more."

The foreclosure settlement will not release banks from criminal liability. Also, banks will not be released from tax or fair-lending claims and state pension fund claims will remain unaffected.

The Attorney General's office will be involved in educational and counseling activities to offer support and legal aid to help people understand their options, McGraw said.

@tag: Reach Megan Workman at megan.work...@wvgazette.com or 304-348-5113.