As state and federal officials near completion of a settlement with banks over shoddy foreclosure practices, a question that has loomed over the talks for months remains: Is it a good enough deal?

After nearly 500 days of drawn-out negotiations, public infighting and private cajoling, the emerging settlement would force banks to overhaul their mortgage-servicing practices. It could also require the banks to pay as much as $25 billion in penalties that would be put toward helping struggling homeowners and borrowers who lost their homes to foreclosure in recent years.

The precise size of the deal hinges largely on the participation of California, whose attorney general, Kamala Harris, has called previous proposals "insufficient," saying that the relief offered would not enable enough of the state's homeowners to stay put and would "excuse conduct that has not been adequately investigated." Officials close to the negotiations said Monday that while California has continued to withhold its support, Harris still could sign on to the settlement if several concerns are addressed, including the extent of legal immunity that banks would get.

With or without California, the deal is likely to move forward and become the largest industry settlement since a multi-state deal with tobacco companies in 1998.

Still, some liberal groups and consumer advocates have argued that the expected terms amount to little more than a drop in the bucket, given the size of the housing crisis. Millions of homeowners remain either in foreclosure or are badly delinquent on their mortgages, and the pending deal would reach only a fraction of them.

For months, such groups have urged the Obama administration to undertake deeper investigations into mortgage-related misdeeds and to push for a much larger settlement later than rush into a less substantial deal now. The groups also have remained skeptical that officials might let banks off the legal hook with little more than a slap on the wrist.

Other housing experts have applauded the administration and state attorneys general for negotiating what they called a meaningful, if admittedly limited, foreclosure settlement.

"Does it go far enough? No. Does more need to be done? Absolutely. Is it a step in the right direction? Yes," said Ira Rheingold, president of the National Association of Consumer Advocates. "It's not going to solve all the problems we have right now. There's a long way to go still to undo all the damage that was done."

That's essentially the argument made by Iowa Attorney General Tom Miller, U.S. Housing and Urban Development Secretary Shaun Donovan, and others involved in the negotiations. They say the current settlement was never intended to cure all the ills of the housing crisis - or to prevent separate investigations into other areas such as how mortgages were bundled and sold to investors - but rather to change abusive business practices and get relief to as many homeowners as possible, as soon as possible.

"Based on the numbers alone, this is pretty modest," said Christopher Mayer, a professor at Columbia Business School. But he added that the numbers don't account for the broader impact that the settlement could have on the housing market. Mayer said a deal likely would lead to more industry-wide loan modifications and would help jump-start foreclosures that have languished since reports of flawed and fraudulent legal filings came to light in 2010, causing banks to halt many legitimate foreclosures. "There are no silver bullets," Mayer said, but the current deal "is an important step forward."

The pending deal would force five lenders at the heart of the talks - Wells Fargo, Bank of America, J.P. Morgan Chase, Ally Financial and Citigroup - to revamp how they interact with troubled homeowners and would bar them from trying to foreclose on borrowers while simultaneously negotiating mortgage modifications.

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Staff writers Olga Khazan and Sari Horwitz contributed to this report.