California's housing market and population have been among the hardest hit by the U.S. foreclosure mess. But settlement talks between the states and the big banks are continuing without California, according to the Wall Street Journal. 

Foreclosed home (Creative Commons)

The settlement, which would total as much as $18.5 billion without California, centers on the major mortgage servicers' use of "robo-signing," or the practice of approving loan paperwork without thorough review.

From WSJ:

Until recently, it seemed unlikely that a settlement would be possible without the participation of California Attorney General Kamala D. Harris. She left the discussions in late September, calling the deal then on the table inadequate. The state accounted for 13.1% of all mortgages outstanding at the end of September and 10.8% of all loans in foreclosure, according to the Mortgage Bankers Association.

The state has long been considered key to a deal. In California, one of every 243 homes received a foreclosure filing in October and 30 percent of mortgages are "underwater," meaning the borrowers owe more on the loan than their home is worth. 

The government is trying to get California to join a $25 billion settlement. An op-ed by American Prospect editor Harold Meyerson in the Los Angeles Times calls the arrangement a "one more sweet deal" for the banks and praises Harris for exiting the talks.

Reach Ryan Faughnder here.