WASHINGTON (AP) — California and New York were considering Monday whether to join most other states in backing a long-awaited settlement with banks over foreclosure abuses. The deal would require the five largest mortgage lenders to reduce loans for about 1 million households.

State attorneys general have set a deadline of the end of Monday for states to join the settlement. Homeowners in states that opt out of the deal wouldn't share in the settlement money.

The reduced loans would benefit homeowners who are behind on their payments and owe more than their homes are worth. The lenders would also send checks for about $2,000 to hundreds of thousands of people who lost homes to foreclosure.

The money available to homeowners could run as high as $25 billion if all states approve the deal.

The five lenders — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — have already agreed to the settlement. In settling the charges, the states would agree not to pursue further investigations against the banks in civil court. The deal would not protect the banks from criminal investigations.

The few states that have resisted the deal have expressed concern that it would limit their ability to take action against the banks for any past wrongdoing that turns up later.

California's backing is particularly crucial. It was among the states hardest hit by the foreclosure crisis. And it has the most residents "underwater": They owe more on their loan than their home is worth. Without California's participation, the money available to homeowners nationally would be about $19 billion rather than $25 billion.

The settlement has been toughened in recent days to allow states to pursue lenders who mistreat borrowers in the future. Fines could run as high as $5 million per violation.

"We are closer now than we've been before, but we're not there yet," California Attorney General Kamala Harris said in a statement over the weekend.

Under the deal, the mortgage principal for about 1 million homeowners would be written down by an average of $20,000. An additional 750,000 Americans — about half the households eligible for aid under the deal — would receive about $2,000.

David Stevens, CEO of the Mortgage Bankers Association and a former Obama administration housing official, said the deal would ease lending restrictions for new loans and aid homeowners at risk of foreclosure.

"This will have a role in providing certainty to the (financial) markets about credit being eased and homeowners getting some money back," Stevens said.

Still, several housing and community organizations have complained that the settlement wouldn't go far enough.

George Goehl of the National People's Action, a collection of community housing groups, said $25 billion for homeowners would be a "paltry down payment," considering that roughly 11 million homes are underwater by a combined $750 billion.

"Anything less than $300 billion is a win for the 1 percent that lets the banks off too easily and falls short of helping both middle-class families and communities targeted most by big bank fraud," Goehl said.

But if California and New York agree to the deal, other holdouts, including Arizona and Nevada, would likely follow suit. Delaware might not. Attorney General Beau Biden has said he still has concerns about the settlement "as currently constructed," he said in a statement.

"We are continuing to review the complicated documents that we received a week ago, and are continuing to advocate for improvements to address our concerns," Biden said.

The settlement would end a painful chapter that emerged from the 2008 financial crisis, when home values sank and millions edged toward foreclosure. Many companies that process foreclosures failed to verify documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures — an action known as robo-signing.

The agreement also promises to reshape long-standing mortgage lending guidelines. It would make it easier for those at risk of foreclosure to make their payments and keep their homes.

Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement.

The settlement would apply only to privately held mortgages issued from 2008 through 2011. Banks own about half of all U.S. mortgages — roughly 31 million loans.

The deal is subject to approval by a federal judge.