WASHINGTON — The state attorneys general investigating abuses in the mortgage servicing industry said Monday that as they work out details of a massive settlement with banks, their main objective remains fixing a system that has subjected consumers to confusion and financial strife.

“What we’re really trying to do is change a dysfunctional system,” said Iowa Attorney General Tom Miller, the point man for the 50-state effort. “We really want to try and change all that.”

The extensive foreclosure problems — from flawed or fraudulent paperwork to questions about improper or incomplete loan transfers — surfaced in September, when firms such as Bank of America and Ally Financial abruptly halted foreclosures. Others followed suit.

A core group of attorneys general has been working on the issue since October, Miller said, communicating regularly with the banks accused of the shoddy practices and nearly a dozen federal agencies that have been conducting their own inquiries.

Last week, state attorneys general, joined by federal agencies including the Justice Department and the new Consumer Financial Protection Bureau, submitted a 27–page term sheet of proposed changes to five of the nation’s largest banks as its opening bid in what is expected to be a series of intense negotiations in coming days.

The proposals try to address wide-ranging complaints about the servicing process:

• One would require the servicers to provide a single point of contact for borrowers looking to modify their loans.

• Another would require them to develop a portal that would allow borrowers to submit and track documents electronically in real time.

• The document spells out the conditions under which servicers should consider principal reductions for certain borrowers.

• It suggests that servicers partner with retailers like Walmart and FedEx Kinko’s, so borrowers can go there to copy, fax, scan, mail or e–mail documents to servicers free of charge.

• A common complaint from borrowers is that they often receive foreclosure notices even as they are negotiating in good faith with servicers to modify their loans. The attorneys general want to ban this dual–track process.

• As for borrowers enrolled in modification programs, their modifications should convert to permanent status if they’ve made three payments on time.

Several attorneys general acknowledged that differences of opinion remain among various stakeholders on two key issues — how to structure a feasible modification program and the precise amount of penalties that should be levied on the banks, some of which could go toward principal reductions for borrowers.