California and New York, two key holdout states for a multi-state mortgage settlement, are expected to join the deal, smoothing the way for an announcement expected on Thursday, according to a person familiar with the matter.

Florida, with its large distressed housing market, was also close to joining the settlement that resolves civil government lawsuits over faulty foreclosures and servicing misconduct, a separate person familiar with the deal said.

More than 40 states said they would join the estimated $25 billion settlement in advance of a February 6 deadline, but several states continued negotiations to address concerns specific to their state.

The value of the state-federal settlement would have dropped significantly if California and Florida decided not to join.

(Reporting By Aruna Viswanatha, Rick Rothacker, Karen Friefeld, with additional reporting by Kevin Gray)

Mortgage