Federal authorities and all of the state attorneys general have been in talks with major mortgage lenders about an overhaul in how foreclosures are handled, as well as determining the amount of fines the banks will be assessed for their shoddy foreclosure practices.

Also on the table is expanded use of home loan modifications.

The government negotiators have presented their outline of a settlement to the mortgage lenders, and for the first time have given an estimate of when a deal might be reached: within two months.

The talks over a settlement have had two prongs: the first part is a 27-page proposal that reportedly would drastically change the way defaulting homeowners are treated. One proposal is that while homeowners are seeking a loan modification, the lenders will not be able to foreclose on them.

Fort Lauderdale "stop foreclosure" attorneys note that under the proposed plan, any borrower who successfully made three payments in a trial loan modification would be given a permanent modification. Currently, even with a trial modification in place, banks can and do foreclose on the homeowner.

Also under the proposed plan, when a modification is denied, it would be automatically reviewed by an ombudsman or independent review panel. Another provision is that banks would have to reward their employees for pursuing modifications over foreclosures.

Source: New York Times "Foreclose Deal Near, State Officials Say" 3/7/2011