Attorney General Kamala Harris announced early Thursday that the state has joined a nearly $26 billion federal settlement with five major banks over foreclosure abuses.

Harris said the settlement could bring up to $18 billion into the state to help hundreds of thousands of homeowners hit by the mortgage crisis.

Overall, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial will pay roughly $26 billion to reimburse American homeowners in 49 states.

Bank of America will pay the most to borrowers as part of the deal -- nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase will pay roughly $4.2 billion, Citigroup will pay about $1.8 billion and Ally Financial will pay $200 million. This does not include $5.5 billion in federal and state payments.

The deal also ends a separate investigation into Bank of America and Countrywide for inflating appraisals of loans from 2003 through most of 2009. Bank of America acquired Countrywide in 2008.

"The settlement includes far reaching relief that will help many of our customers and complement our already extensive efforts to improve our borrower assistance efforts and servicing processes," JPMorgan Chase said in a statement.

The banks and U.S. state attorneys general agreed to the deal late Wednesday after 16 months of contentious negotiations. New York and California had been reluctant to come aboard until their states’ share of the settlement was increased late Wednesday.

Last September, California dropped out of the multistate negotiations when the state’s cut of the settlement was a mere $4 billion.

"This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here,” Harris said in a prepared settlement. “We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending."

As part of the separate California guarantee, banks must enact a minimum of $12 billion in principal reductions for California homeowners, Harris said.

Failure to achieve this minimum level of reductions will result in substantial cash payments of up to $800 million that the banks will have to pay to the state. Unlike the larger multistate agreement, which is enforceable in a federal court in Washington, D.C., this payment provision empowers Harris to summon the banks to California state court.

Harris also announced that to speed investigations and strengthen prosecutions of these mortgage cases, the state was expanding its Mortgage Fraud Strike Force, adding to the more than 42 members already working on the team.

"This is an historic amount of relief for California homeowners, but it is one piece of a broader focus,” she said “We will continue our crackdown on mortgage fraud and quickly move to pass legislation that will simplify, reform and upgrade our broken mortgage system."

The financial benefits of the agreement include:

• More than $12 billion is guaranteed to reduce the principal on loans or offer short sales to approximately 250,000 California homeowners who are underwater on their loans and behind or almost behind in their payments.
• $849 million is estimated to be dedicated to refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans.
• $279 million will be dedicated to offering restitution to approximately 140,000 California homeowners who were foreclosed upon between 2008 and December 31, 2011.
• $1.1 billion is estimated to be distributed to homeowners for unemployed payment forbearance and transition assistance as well as to communities to repair the blight and devastation left by waves of foreclosures, targeted at 16,000 recent foreclosures.
• $3.5 billion will be dedicated to relieving 32,000 homeowners of unpaid balances remaining when their homes are foreclosed.
• $430 million in costs, fees and penalty payments.

The settlement ends a painful chapter that emerged from the financial crisis, when home values sank and millions edged toward foreclosure. In addition to the payments and mortgage write-downs, the deal promises to reshape long-standing mortgage lending guidelines. It will 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 30 million loans.