Finally, a foreclosure settlement (Maybe)

Housing Secretary Shaun Donovan is one of the participants in the foreclosure settlement talks that are expected to produce a mortgage settlement soon.

WASHINGTON (CNNMoney.com) -- States have until late Monday to agree to the latest draft deal aimed at relieving homeowners struggling with mortgages bigger than their home's value.

That means federal officials and states attorneys general could be days away from announcing a deal with some of the nation's largest banks that could yield $20 billion to $25 billion for those homeowners.

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Foreclosure Fiasco

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• New foreclosures jump 9% in second quarter
• The other foreclosure crisis: Losing a home over $400 in back taxes
• Whistleblowers win $46.5 million in foreclosure settlement

"Documents have been shared with the attorneys general," said U.S. Housing and Urban Development Secretary Shaun Donovan during a White House briefing on Wednesday. "They are making decisions as we speak. A number of them have already announced support for it, and it will be finalized, I would expect, in the coming days."

Indeed, the states have been given until close of the business day Monday to agree to the deal, said Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, who has been leading negotiations.

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Under the latest draft, about 1 million U.S. homeowners who are "underwater" on their mortgages -- with principal exceeding the home's value -- could be eligible for as much as $20,000 in relief of principal owed, Donovan has said.

In return, mortgage servicers in states that agree to the deal would get immunity from future state servicing and originating claims -- although homeowners could pursue claims against banks and states could still pursue criminal investigations, according to reports.

Driving the deal originally were allegations that mortgage servicers cut corners and enlisted robo-signers that improperly foreclosed on homeowners. However, the deal under negotiation now wouldn't be able to return houses to those who have already been foreclosed on, according to reports.

What the deal would do is ensure that mortgage servicers agree to communicate better, avoid delays and give homeowners who are late on mortgage payments a fairer shake.

The big question is how much money would be available to help homeowners, but that depends on how many states agree to the deal. If all 50 states sign on, the mortgage servicing settlement has the potential to offer the largest housing relief program available to ordinary Americans since the financial crisis began.

However, attorneys general from California and Delaware have said the deal, as drafted last week, wasn't good enough for their states. Spokesmen for those officials said Thursday they had nothing new to add.

Jason Miller, a spokesman for Attorney General Beau Biden of Delaware, said Biden would talk more about his decision when settlement terms are made public. (Biden is the son of Vice President Joseph Biden)

New York Attorney General Eric Schneiderman has been tight-lipped about his participation when asked. A call to his office wasn't returned.

Generally, the attorneys general have said they're worried they if they agree to the deal it would cripple their own investigations into mortgage cases.

But Donovan said last month that the releases from future lawsuits under consideration for banks in the draft deal are "narrow enough" to allow for a new federal probe to investigate mortgage securities fraud.

At least one consumer advocacy group, the Center for Responsible Lending, has said the deal -- while "no silver bullet" -- leaves room to hold banks accountable in other mortgage probes, said Kathleen Day, a spokeswoman for the nonprofit.

The negotiations are between federal agencies, including the U.S. Department of Justice and the U.S. Department of Housing and Urban Development, as well as the state attorneys general and the five largest mortgage servicers:Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial (GJM). A few other regional banks that service mortgages are reportedly considering signing on as well.

The big banks aren't as keen to sign off on a multi-state deal that doesn't include immunity from mortgage servicing claims from California's and New York's attorneys general, said a source familiar with the deals.

And left-leaning groups, including Move On and the New Bottom Line, are continuing to urge states to hold out for a big criminal investigation and a $300 billion settlement award.