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STEVE CHIOTAKIS: Remember foreclosuregate? That was the big mortgage document mess that made for a housing headache over which loans belonged to whom?

Well this morning the Wall Street Journal reports the White House says it’s willing to settle some of those complaints. In exchange though, the Obama administration is asking banks to trim $20 billion from those mortgages of some homeowners.

Marketplace’s Janet Babin is with us live with the latest this morning. Hi Janet.

JANET BABIN: Good morning Steve.

CHIOTAKIS: Under this reported deal, what would the banks be agreeing to do?

BABIN: Yeah, so it appears that the Federal Government is trying to broker a deal with banks and State Attorneys General that would require banks to spend $20 billion, like you mentioned, either to pay civil fines or to fund loan modifications for homeowners who are underwater on their mortgages. Now like you mentioned, the housing market has been stalled because of foreclosure issues that surfaced last fall. Those issues have clogged the market and kept home prices falling.

I just spoke with Ohio State law professor Peter Swire about the proposal. He was part of President Obama’s National Economic Council on Housing.

PETER SWIRE: It’s a good step for the banks because they’ll try to put the mess behind them from robo-signing. It’s a good deal for consumers and for the housing market, because it can make money available to try to fix some of the problems we’re facing.

CHIOTAKIS: Janet, we’ve heard a lot of plans about how to fix the housing market. And look where we are. How is this any different?

BABIN: Yeah, Steve this might not be different — this proposal. There are many complaints out there that $20 billion may sound like a lot to you or me, but is really just a drop in the housing crisis bucket. Another complaint I’ve heard from sources this morning is that the real problem — mortgage servicing, you know where banks sell your mortgage to other banks — that’s not changing and it’s not addressed at all under this plan.

CHIOTAKIS: OK Marketplace’s Janet Babin reporting. Janet thanks.

BABIN: You’re welcome.

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JEREMY HOBSON: Remember foreclosuregate? That big mortgage document mess that erupted last fall and called into question who owned which home loans? Well this morning, The Wall Street Journal reports the White House has a plan to settle those disputes with lenders.

And as Marketplace’s Janet Babin reports the potential $20 billion deal may be just what the housing market needs.

JANET BABIN: An Administration plan to negotiate loan modifications could help get foreclosed homes off the market — and there is a lot of them to move. New data out today from research firm RealtyTrac finds that more than a quarter of all homes sold last year were foreclosures, down a whisper from last year, but still far above normal. The glut of people underwater on their mortgages has forced home sale prices down just about everywhere.

Rick Sharga is a senior vice president at RealtyTrac. He says the overhang of distressed properties owned by banks is crippling the housing market.

RICK SHARGA: There are by our estimation right now, over a million bank homes that are sitting on the banks books. That’s simply going to keep home prices depressed, and we need those properties purchased by home buyers before the market has a chance to recover.

A government settlement with banks could break the foreclosure log jam that began last fall, when many banks admitted to foreclosure improprieties, like robo-signers.

I’m Janet Babin for Marketplace.