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), JPMorgan Chase ( JPM), Citigroup ( C), Wells Fargo ( WFC) 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, told Congress last month that they were putting finishing touches on the sanctions. In their annual reports, Ally, JPMorgan and Bank of America said they might face fines.

At the same time, the federal mortgage modification plan heralded by the Obama administration in 2009 has done little to help struggling homeowners facing foreclosure. About 7 million Americans have lost their home to foreclosure since the start of the housing-market collapse and forecasters at RealtyTrac expect another 3 million foreclosures by the end of 2012.

Many borrowers were not eligible for the program or couldn't navigate the complex maze of enrollment, further complicated by miscommunication, paperwork flaws and errors at mortgage servicers. The vast majority of troubled borrowers who enrolled in the "Making Home Affordable" program have ended up leaving it for alternative workouts provided by lenders or simply lost their home.

The programs were voluntary without specific rules on implementation, but the proposal sent to servicers on March 3 would create mandatory guidelines enforceable by law. It's unclear how banks will respond to the proposal, since they face mounting legal costs related to mortgages outside the foreclosure and servicing issues.

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