SACRAMENTO (CBS/AP)- California should receive at least $20.6 billion from a settlement with the nation’s major mortgage lenders, the largest share of any state and about $2 billion more than expected when the agreement to assist homeowners was announced last year, according to a report released Thursday.

The money from five banks will help an estimated 175,000 California homeowners struggling with their mortgages.

The overall $42 billion settlement covers every state except Oklahoma, which struck its own agreement with the lenders. The national Office of Mortgage Settlement Oversight announced the state-by-state breakdown.

“We’re going to definitely overshoot what we thought we would get at the national level,” said Katherine Porter, a University of California, Irvine, law professor who is overseeing how the settlement is being implemented in the state. “I think that’s great news for the state’s entire economy.”

She predicted the benefit to the state ultimately could reach $22 billion, based on her analysis of the national report.

Nearly 100,000 California borrowers are getting reductions in the amount they owe on their home loans or an outright forgiveness of their loans, at a cost to banks of about $11 billion.

Most of the rest of the money is going to about a third of the borrowers who completed short sales or deeds in lieu of foreclosure, in which the lender agrees to a sale price lower than what is owed on the property or accepts ownership instead of foreclosing.

Only a fraction is aiding borrowers who are current on their payments but owe more on their mortgages than their houses are worth. About 8,300 of those homeowners have been able to refinance their mortgages at a lower rate, saving about $445 million in total.

Programs benefiting that group of underwater homeowners are still being rolled out and will receive more emphasis in coming months, Porter said.

The settlement will not help California homeowners who played by the rules and are making their monthly payments yet are unable to refinance at today’s low interest rates because their homes have lost too much value. Even when those homeowners are not underwater on their loans, banks will charge thousands of dollars in refinancing fees or require costly private mortgage insurance if their home has lost too much value.

Porter acknowledged that the emphasis to date has concentrated on more desperate borrowers who were on the verge of losing their homes, although she plans a second report on areas where more work needs to be done.

“It’s only a slice of the market, and I think we need to keep growing that slice of pie,” she said of the settlement.

Porter said principal reductions on first liens are coming in higher than was expected, particularly from the three banks that negotiated agreements with California Attorney General Kamala Harris in addition to participating in the national settlement.

Bank of America Corp., JPMorgan Chase & Co., and Wells Fargo & Co. all had principal reductions several times greater than anticipated. For instance, about 10 percent of Wells Fargo’s home loans were in California, but about 60 percent of its relief efforts are benefiting its California borrowers.

That contrasts with Florida, which according to the national report was receiving principal reductions at about the same rate as each banks’ exposure in that state. The other banks involved are Citigroup Inc. and Ally Financial Inc.

Porter credited California’s monitoring of lenders, along with a package of bills approved last year that writes the national settlement into California law and broadens it to include all lenders, not just those who signed the national agreement.

The penalties written into California’s settlement and laws also helped, she said.

“Our office has really kept on the banks to make sure they got it done quickly, they got it done effectively,” Porter said.

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