Calling it “inadequate for California,” the state is rejecting the latest settlement proposal between states and major U.S. banks over lending abuses that fueled the foreclosure crisis.

California Attorney General Kamala Harris pulled out of nationwide talks with the banks in October, saying the proposed $25 billion deal gave too much immunity to lenders and didn’t provide enough relief for homeowners in a state hard hit by the mortgage meltdown.

On Wednesday, Harris’ office said a new version of the settlement plan still falls short of those goals.

“At this point, this deal does not suffice for California,” said spokesman Shum Preston.

For more than a year, the nation’s five largest mortgage lenders – Bank of America, Citibank,Wells Fargo, JPMorgan Chase and Ally – have been working on a settlement agreement with a coalition of attorneys general in 50 states.

The latest settlement proposal seeks to help nearly 1 million homeowners, who could see the size of their mortgages lowered by an average of $20,000, according to the Associated Press.

The deal also calls for payment of about $1,800 to homeowners harmed by deceptive lending practices, the AP said.

Some consumer groups said the deal is an imperfect compromise that still provides significant reforms.

The Center for Responsible Lending said the pact could mean sustainable loan modifications for many delinquent homeowners and could end so-called “robo-signing” practices by requiring banks to individually review key foreclosure documents.

California and other states began their investigations after lenders and mortgage servicers were accused of rubber-stamping foreclosures without actually reviewing homeowners’ loan documents.

California is the nation’s No. 1 state when it comes to the number of foreclosures.

According to Irvine-based RealtyTrac, more than 420,000 homes had a foreclosure filing last year, which is more than double the filings in Florida, which had the next most filings.

Lawyers in the AG’s office have reviewed the settlement offer during the past several days and found that the proposal prevents the state from pursuing substantial legal actions against lenders.

“Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability,” said Preston.

The state’s rejection came a day after President Barack Obama in his State of the Union speech called for the creation of a special investigative unit to delve into abusive lending practices that helped trigger the foreclosure crisis.

In many ways, the goals of federal unit, made up of federal prosecutors and state attorneys general, are similar to those of the 40-member Mortgage Fraud Strike Force set up by Harris in May.

That unit recently joined forces with Nevada Attorney General Catherine Cortez Masto’s mortgage fraud strike force to investigate lending abuses.