The primary regulator for the nation’s largest banks is preparing to move ahead on its own settlement with lenders over foreclosure practices and may announce a deal in the next few weeks, according to a source familiar with the process.

The Office of the Comptroller of the Currency’s (OCC) possible split from other national authorities would mark a dramatic shift away from efforts for a coordinated settlement with major mortgage servicers, including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.

Authorities – including bank regulators, the Department of Justice and a coalition of 50 state attorneys general – are probing allegations that banks foreclosed with improper documents and cut corners on repossessing homes from borrowers.

The OCC is in talks with the banks it regulates to prepare so-called consent orders, requiring the banks to fix faulty foreclosure processes within a certain timeframe, and potentially levying fines for violations, the source said.

The OCC, according to the source, has become impatient with infighting over the structure and shape of a coordinated settlement.

OCC spokesman Bob Garsson declined to comment.
The authorities had hoped to reach a coordinated settlement that would fix servicing problems, penalize the banks and help homeowners wrongfully foreclosed.

Banks have hoped for a settlement because it could help contain the litigation risk facing the industry and allow them to start repairing the damage from the latest blow to the industry’s reputation.

Last month, sources familiar with the investigation said the state attorneys general and others were seeking to create a foreclosure fund financed by the banks with as much as $20 billion in cash, and were seeking to require the banks to conduct principal writedowns on mortgages if the debt on a home is greater than the home’s market value. (Reuters)