WASHINGTON – A proposal to allow some homeowners who are “under water” on their mortgages to refinance has become part of settlement talks between government officials and major banks over allegations of foreclosure abuses.

The proposal has been floated in hopes of luring California Attorney General Kamala Harris back into the talks, according to a person familiar with the discussions. Last month, Harris pulled out of the talks involving most state attorneys general and federal officials because she said the deal being discussed didn’t do enough for California.

Her state would be a major beneficiary of a refinancing plan because it leads the nation with about 2.1 million mortgages in which the owner owes more than the value of the home.

The new proposal would apply to people who are under water but making mortgage payments on time. Only mortgages owned by banks – about 20 percent of all mortgages – would be eligible. Most mortgages are owned by investors as part of mortgage-backed securities.