The talks stem from an investigation launched by the nation's Attorneys General. The mortgage servicers are accused of submitting foreclosure documents signed by those who haven't confirmed the accuracy of the paperwork. The practice is known as robosigning and a settlement could provide homeowners with some needed relief.
Shirley Burnell has lived in an Oakland home for four decades and she has been fighting foreclosure for three years.
"We've been doing the same paperwork for years, just over and over and over and over. So I don't know what the issue is," said Burnell.
Donna Vieira has been living in her San Leandro home for 15 years. The numerous books and games belonging to her 6-year-old child are a pleasant distraction.
"It's an escape from the anxiety we have," said Vieira.
Burnell and Vieira are two Bay Area homeowners who could be helped by any settlement. California Attorney General Kamala Harris is part of the team trying to negotiate an out-of-court settlement.
"I'm very confident because everybody is aware of the situation. The pressure is on," said Vieira.
"I want them to get help for homeowners, but in that realm of trying to do that, I would also like to see some people prosecuted," said Burnell.
A document dated March 3 and obtained by the Los Angeles Times reveals some potential terms of a settlement, key among them is principle reduction. Basically banks are being asked to reduce the amount homeowners owe to bring it closer to the value of the home. That's something banks have long resisted.
"Too big to fail doesn't mean you're too big to do the right thing. And that's really what ought to happen here. And we really need to see more of that," said Norma Garcia from Consumer's Union.
John Eller of the Alliance of Californians for Community Empowerment has been following negotiations closely. He says a hold up to any settlement could be the insistence by banks that they be protected from any future litigation.
"They're starting to pull back from the table. It's hard to say what's going to happen next," said Eller.
The Mortgage Bankers Association and American Bankers Association declined to comment for this story, but it has been widely reported that the banks have offered a settlement of $20 billion.
"That's not even enough for California based on what's been done," said Eller.
"We will see what it looks like when it comes to fruition," said Garcia.
If a settlement is not reached, we could be looking at years of litigation and more federal and state investigations. The servicers involved in the talks are Bank of America, Wells Fargo, Citigroup, JP Morgan Chase and Ally Financial.