Sources are downplaying discussions over a mandatory cash-for-keys program that would pay a reported $21,000 to a delinquent borrower, with one prominent Republican quickly shooting down the idea. "This proposal is simply outrageous and the worst bailout idea dreamed up so far," said Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee. Regulators led by the Federal Deposit Insurance Corp. proposed the idea last week, according to reports. But sources familiar with the matter told HousingWire Monday that the idea did not come from the FDIC and that it was only one of many proposals discussed during the meeting. At any rate, there are no ongoing discussions, sources said. The talks were reportedly part of the ongoing settlement saga between the 50 state attorneys general, federal regulators and major lenders. However, a spokesman for the lead in the investigation, Iowa AG Tom Miller, said their office was not a part of the meeting. Still, the cash-for-keys discussion is the latest battle-line drawn between Republicans like Bachus attempting to deconstruct foreclosure prevention programs and consumer advocates who are repeatedly pushing for a crack down on mortgage servicers still trying to fix foreclosure errors found last fall. "While its important to have good options for the limited number of families who will not be able to stay in their homes, the emphasis needs to remain focused on keeping families in their homes," said Tim Lilienthal, bank accountability campaign director for the PICO Network. "The banks have not come anywhere near exhausting the options for avoiding foreclosure and the work needs to stay focused on that." The PICO Network, the National People's Action and the Iowa CCI will head a national call-in day Tuesday for homeowners to reach out to their AG offices nationwide. Leaders said they will continue to push for mandatory principal write-downs, criminal penalties and restitution for families caught up in the problems. "The Attorneys General need to pick a side – the millions of homeowners they’ve sworn to protect or the big banks that have bankrupted our communities and country," said Judy Lonning, a member of the Iowa CCI and schoolteacher. Bachus, however, said such a settlement would have the exact opposite effect. "Regulators are using the glorified phrase ‘fresh start’ to sell a bad idea," Bachus said. "It’s not a fresh start, but a rotten finish that is bad for homeowners, bad for taxpayers and bad for our economy." Write to Jon Prior. Follow him on Twitter @JonAPrior.