16 banks must pay for bad foreclosures

The Fed said it believed financial penalties were “appropriate’’ and that it planned to levy fines. All three regulators said they would review the foreclosure audits. Under the agreements reached, the lenders and servicers have 45 days to hire an auditor and will “remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies.’’ There is no minimum or maximum dollar amount identified.

In the four years since the housing bust, about 5 million homes have been foreclosed upon. About 2.4 million primary mortgages were in foreclosure at the end of last year. Another 2 million were 90 days or more past due, putting them at serious risk of foreclosure.

Critics, including Democratic lawmakers in Congress, say the order is too lenient on the lenders. House Democrats introduced legislation yesterday that would require lenders to perform a series of steps, including an appeals process, before starting foreclosures.

“I want to know what abuses [the government agencies] identified, which banks committed them, and how their proposed consent agreement is going to fix these problems,’’ said Representative Elijah Cummings, Democrat of Maryland, the ranking member of the House Government and Oversight Committee.

Senator Tim Johnson, Democrat of South Dakota, chairman of the Senate Banking Committee, said the agreements struck were a “step towards addressing the improper and fraudulent practices to which many of the country’s largest mortgage servicers have admitted.’’

The other lenders and service providers cited by the agencies include: Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services, and MERSCORP.

Without specifically identifying instances of bad foreclosures, the government agencies noted in the report that the “deficiencies in foreclosure processing observed among these major servicers may have widespread consequences for the housing market and borrowers.’’

John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer housing watchdog, said the government’s action is a year too late. It does little to help those who are just now wrestling with a foreclosure and those who have already been displaced, he said. Rather than moving swiftly to seize people’s homes, the banks should have done a better job helping people lower their mortgage payments through modification programs, he said.

“There are so many people who, if they had received a meaningful modification, could have stayed in their homes,’’ he said.