Housing and Urban Development Secretary Shaun Donovan on Wednesday said about one million borrowers are expected to benefit from principal reductions on their mortgages as part of a wide-ranging settlement with banks over dubious foreclosure practices.

He said the settlement talks are very close to a conclusion during a speech before the Winter Meeting of the U.S. Conference of Mayors. Banks and government officials have been negotiating for months to settle an investigation into the faulty foreclosure practices.

Donovan said about one million write-downs are expected, and there are also a number of families that would get direct compensation as a result of the settlement.

Principal reduction can have a substantial impact on the housing market nationally, he said.

(Reporting By Margaret Chadbourn; Editing by Chizu Nomiyama)

Mortgage