NEW YORK ( TheStreet) -- Federal and state authorities have banded together to give large banks a detailed proposal for how to handle loan servicing and foreclosures, though experts expect another 3 million Americans to lose their homes before the housing market recovers.
The 27-page document was given to mortgage servicers last week and sought "a binding legal requirement," a spokesman for Iowa Attorney General Tom Miller told Bloomberg. The proposal is separate from monetary penalties that federal and state authorities plan to seek.
The move comes months after a scandal erupted over big banks' practice of "robosigning," in which employees would sign off on thousands of foreclosure affidavits without properly vetting the material. Widely publicized cases led Ally Financial, Bank of America (BAC - Get Report), JPMorgan Chase (JPM - Get Report), Citigroup (C - Get Report), Wells Fargo (WFC - Get Report) to review processes and, in some cases, temporarily halt foreclosure proceedings.
Meanwhile, attorneys general in all 50 states, led by Miller, partnered together to investigate the matter as federal authorities - including the U.S. Treasury Department's Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp. - started probing the issue as well.The comptroller, John Walsh,